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The Canadian eCommerce Conundrum

There are many mental images one could associate with Canada and Canadians. Scenic vistas, moose, skiing, and maple syrup, for example.

But monikers like "digitally savvy” or “mobile enthusiasts” maybe not so much, though in recent weeks the Canadian mobile market has gotten a bit more attention than usual. PayPal kicked off June by announcing the expansion of its OneTouch for Web in the U.K. and Canada (and was followed up shortly thereafter by Apple’s announcement of the expansion of Apple Pay into the same two markets).

And while the Canadian side of both announcements slid down the list as most publications focused on the U.K. side of both announcements, the Canadian launch may potentially tap into a larger, mobile friendly group of consumers.

Because, as MPD CEO Karen Webster learned from PayPal Canada’s General Manager Cameron Schmidt during a recent PYMNTS’ PayPal Around the World Series - Canadians are a much more mobile-enthused group than most outsiders would imagine.

“The value proposition particularly resonates among Canadians,” Schmidt told Webster. “Mobile is growing incredibly fast. It turns out in Canada has the highest smartphone penetration in the world outside of South Korea. Over the last few years we partnered with both iconic Canadian brands — like Roots and Hudson’s Bay — and 200,000 small businesses nationwide that are looking to create mobile and digital experiences.”

However, when it comes to eCommerce, Canada presents something of a conundrum, because, despite how much mobile penetration there is, there’s not a lot of eCommerce growth. Overall, eCommerce has been slow to catch on with Canadian businesses.

“I think businesses are catching up, but there has definitely been a notable lag," Schmidt said. "In Canada today only 20 percent of business are engaging in online commerce much less mobile. The upside is just massive for businesses to grow, both domestically and cross border.”

However, while some businesses — particularly those that are attempting a worldwide evolution into becoming the operating system for eCommerce — might view a marketplace where fewer than a quarter of businesses are pursuing digital commerce as a negative, PayPal Canada is pretty chipper about it.

“I love that 20 percent statistic, it’s what gets us fired up every morning to see that 20 percent get to 100 percent because we know that consumer and business will succeed increasingly and we will get to see an even more vibrant economy,” Schmidt told Webster.

Because the Canadian marketplace, pushed by all that smartphone ownership, is changing in a way that allows PayPal to have a front row seat. Of the rapidly expanding pool of Canadian eCommerce shoppers, Schmidt notes that one-third have PayPal accounts and are increasingly interested in shopping around the world - understandable given the limits locally, and good news for PayPal, which specializes in secure cross-border trade.

“PayPal is particularly well-suited to offer safe and secure cross-border payments,” Schmidt noted. “And that means we can leverage both a mindset geared to engaging with global commerce. Also we’re really a nation of immigrants - about 20 percent of the population is foreign born. We help people cost effectively and securely send money home and abroad - and now we make that easy to do on mobile. That’s a big value added here.”

And a value added in Canada is very possibly a value added for the rest of PayPal’s consumers worldwide - since Canada’s unique location, economy and mobile penetration makes it a “test kitchen” of sorts for the rest of the PayPal international brand.

“PayPal in Canada operates as a bit of test bed,” Schmidt explained. “There are a number of things that make the market particularly well-suited to test things and then export the insights. We have been part of the payments testing in the mobile app, a lot of the pay at table efforts got their start in pilot programs in Toronto’s restaurant scene, which is very well developed.”

And that odd combination in the Canadian consumer space, between a very developed mobile market and an underdeveloped local eCommerce market, has really itself been an educational benefit, as it has been a lesson in breaking through and leapfrogging over old assumptions.

“This topic of mobile until now has been incredibly binary - it is either physical or virtual. And the devices make that binary discussion kind of irrelevant,” Schmidt said. “The real opportunity in Canada is to break through the inertia that exists among some businesses to try engaging in digital commerce. And that is where we can help - for consumer and merchants. The capabilities we have today are so rich and powerful, the trick is to get them moving across the ecosystem.”

Luckily, in some ways the rumors are true when it comes to Canada — the people are very polite and enthused about concepts like cooperation, teamwork and building it out together.

“We have a collaborative mindset - that is particularly true in Canada,” Schmidt told Webster. “We really enjoy the work we do with merchants' large and small businesses and that is where we get our energy and insights. Canadians are proud of their homegrown merchants, whether they be big or small. The extent to which we are tied to Hudson Bay, Cineplex - these brands mean a lot — they are very, very powerful and people are proud of them.”

PayPal, Schmidt says, rests its secret sauce on an ingredient around giving the consumers what they want. If consumers love certain brands, then PayPal works with those brands. If regulation is coming, PayPal needs to be part of that conversation.

“We are the No. 1 digital wallet in Canada and given our strong position, the importance of collaboration extends to involving the ecosystem of payments and commerce throughout his period of innovation and change. That means working with Visa and MasterCard on payments and the government on regulation. Those are things we are focused on and [we] take our role in the ecosystem very seriously.”

PayPal’s focus is more or less to plug in as part of any experience that a merchant wants to build or a shopper wants to seek. That means to the extent possible they are device and platform agnostic and their intent is always to cast a wide net.

“The mere impact of people walking around in their lives and coming across these experiences really matters,” Schmidt noted. “To give you an example, at a coffee shop around the corner from our office, if you go in there and pay with PayPal through the app, without fail all the people in line behind you see that and some will ask me about how I did it and how cool it is. There is a word of mouth factor that is at play.”

While we may not think of Canada on the cutting edge of mobile - a lot of the innovations we see are pre-tested among Canadians - who quietly (and politely) have adopted smarttech in astounding numbers. How they will use that smarttech - at NFC POS devices, or through mobile apps - that still remains to be seen.

“I’m not a betting man - but I think at this point so much is changing so fast each week, the best move is to stay agnostic and keep all your eggs out of one basket,” Schmidt said.



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.

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