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As international payments continue to increase in Canada, alongside the growth of international commerce, consumers and businesses alike will benefit from evolving payment innovations and standardisation.
This includes the adoption of ISO 20022, an internationally recognised standard for financial information exchange. Recent findings from Payments Canada’s research team demonstrate the usage and challenges of international payments within the country and the scale at which this standard will benefit Canadians.
International payments are on the rise in Canada
Payments Canada’s recent research revealed that one in five people sent money internationally using their Canadian bank account over the past 12 months, representing a 33% increase from the year prior. The leading destination for these international payments was the United States (50%). The two most popular reasons for sending money internationally were to transfer funds to another individual with a bank account in a foreign country and to pay an international retailer.
50% of Canadians aged 18-34 send money internationally once a month or more often as compared to 21% of Canadians aged 55 or over. Men are more likely than women to regularly send money internationally (40% versus 27%). In particular, 91% of younger men (aged 18-34) who are self-employed or work in the gig economy send money internationally, accounting for more than any other age group.
Among those who sent an international payment in the past 12 months, gig workers were significantly more likely to send international payments regularly (62%) than non-gig workers (26%). The gig economy is a key employment source for more than one in ten working Canadians, of which 21% rely on gig work as their primary source of income and 65% rely on it to supplement another source of income. As Canada’s workforce continues to evolve rapidly with the increased adoption of freelance, contract, self-employed and gig work, sending money abroad with a regular cadence is likely to continue with the core of these workers.
How international payments are most commonly sent
The two most widely used methods for sending money internationally from Canada are electronic transfers via a mobile banking app or online banking account at 31% and PayPal Transfer at 30%. Wire transfer was the next most widely used method at just 11%. Canadians consider the ease of making a transaction as a key consideration for all payment methods, while speed is a top reason for using wire transfers.
Introducing ISO 20022 to support more efficient international payments
The global payment sector is in the midst of a substantial evolution, transitioning from numerous legacy financial messaging data standards to embracing ISO 20022. ISO 20022 offers significant advantages over existing market standards.
As the use of international payments continues to increase in Canada, so does the importance of introducing ISO 20022 to our payment systems. By introducing richer and better quality data that travels with each payment, this standard will improve interoperability among payment systems, enable precise compliance procedures and facilitate seamless processing of international payments from start to finish.
Through their financial institutions, both businesses and consumers will benefit from more streamlined payment processing and enhanced operational efficiencies that lead to cost savings. Enhanced visibility into financial transactions and access to more value-added services, thanks to increased accompanying quality data, will benefit both parties.
As part of our work to bring easier, smarter and safer payments to all Canadians through our members, Payments Canada is leading the multi-year task of implementing and supporting the new ISO 20022 standard in Canada.
Learn more about the benefits of ISO 20022 and the work Payments Canada is doing to introduce this global standard to payments in Canada at The Payments Canada SUMMIT, taking place from May 29-31, 2024, in Toronto. On Day 1, I will be moderating a breakout session, Empowering corporates and banks: unleashing the benefits of ISO 20022, alongside subject matter experts from Scotiabank, ADP and TD Bank. Registration is still open and I hope to see you there!
