Credit Cards: Incl Impact of COVID-19 - Canada - September 2020

OVERVIEW
What you need to know
Key issues covered in this Report
EXECUTIVE SUMMARY
Top takeaways 
Market overview 
Impact of COVID-19 on credit cards
Figure 1: Short, medium and longer-term impact of COVID-19 on credit cards, August 2020
Opportunities and Challenges
Strong demand for innovative rewards
COVID-19 could reduce the influence of branch staff while increasing the influence of online reviews 
Brand affiliation matters 
COVID-19 forcing a rethink of rewards
COVID-19 spurs BNPL
Repackaging travel rewards in the COVID-19 era
Younger users more likely to prefer a card issued by their main financial institution
THE MARKET – KEY TAKEAWAYS
Impact of COVID-19 on credit cards
Interchange fees decline
Credit card challengers and alternatives
Credit scoring gets an upgrade
COVID-19 credit card relief measures
MARKET FACTORS
Impact of COVID-19 on credit cards
Figure 2: Short, medium and longer-term impact of COVID-19 on credit cards, August 2020
Interchange fees
Security of mobile wallets
Credit scoring gets an upgrade
MARKET OPPORTUNITIES
COVID-19 credit card relief measures 
New credit cards
Figure 3: Neo Financial Instagram post, July 2020
Brim Financial 
Figure 4: Brim Financial Instagram post, April 2020
Other challengers to traditional credit cards
Shopping apps offer another way to earn rewards 
COMPANIES AND BRANDS – KEY TAKEAWAYS
Air Canada unveils new loyalty program
Mogo launches prepaid Visa with automatic carbon offsets
BNPL takes off
COMPETITIVE STRATEGIES 
Air Canada unveils new loyalty program
Mogo launches prepaid Visa with automatic carbon offsets
Buy Now, Pay Later
Afterpay comes to Canada
Visa Installments pilots in the US
Splitit partners with MasterCard to expand BNPL
Citi introduces Buy Now, Pay Later for Amazon purchases in the US
Sezzle enters the Canadian market
COVID-19 spurs BNPL
MARKETING CAMPAIGNS
American Express Canada “Stands tall for small”
Figure 5: Amex Shop Small – Supporting Local Businesses, July 2020
Vancity does its bit to support small businesses in BC
Figure 6: When we're open to change, magic happens, June 2020
RBC motivates customer spending…
…while CIBC launches revival rewards
Visa keeps its Olympic sponsorship relevant
Figure 7: “Front levers aren’t easy. But washing your hands is” Instagram video, April 2020
Apple Card (US) increases acquisition activity
THE CONSUMER – WHAT YOU NEED TO KNOW
More than four in five Canadians own a credit card
Credit card choice and usage influenced by rewards
Consumers value cashback and innovative rewards
Few are satisfied with COVID-19 relief measures
Younger consumers more influenced by online reviews
Most consumers prefer using a physical card
OWNERSHIP AND USAGE
More than four in five Canadians own a credit card
Figure 8: Ownership of financial products, June 2020
Credit card ownership by age is three-tiered
Figure 9: Credit card ownership, by age, June 2020
Income and ethnic differences in ownership
Figure 10: Credit card ownership, by income, June 2020
ATTITUDES TOWARDS REWARDS
Credit card choice and usage influenced by rewards
Figure 11: Attitudes towards rewards, June 2020
Around a third of 18-44s find it difficult to understand the rewards system
Repackaging travel rewards in the COVID-19 era
Younger consumers more influenced by interest rate and brand affiliation
Figure 12: Select attitudes towards rewards (% agree), 18-44s vs over-45s, June 2020
COVID-19 forcing a rethink of rewards
REASONS DRIVING USAGE
Cashback is the top driver of usage
Figure 13: Reasons for using primary card, June 2020
Men and younger users keener on some factors
Figure 14: Reasons for using primary card (select), by gender, June 2020
Figure 15: Reasons for using primary card (select), 18-44s vs over-45s, June 2020
Consumers value cashback and innovative rewards
Figure 16: Attitudes related to value perception of rewards, June 2020
Strong demand for innovative rewards
Figure 17: Select attitudes related to value perception of rewards (% agree), 18-44s vs over-45s, June 2020
Young men more willing to pay a fee for better rewards
Figure 18: Select attitudes related to value perception of rewards (% agree), by gender, June 2020
Majority believe rewards are over-estimated
COVID-19 AND CREDIT CARDS
Few are satisfied with relief measures
Figure 19: COVID-19 and credit cards, June 2020
Younger users have been more impacted 
Figure 20: COVID-19 and credit cards (select), by age, June 2020
COVID-19 could reduce the influence of branch staff while increasing the influence of online reviews 
COMPETITIVE ECOSYSTEM
Visa/MasterCard preferred due to their wide acceptance
Figure 21: Attitudes related to the credit card competitive ecosystem, June 2020
Younger consumers more influenced by online reviews
Younger consumers more likely to prefer a card issued by their main financial institution
Figure 22: Attitudes related to the credit card competitive ecosystem (select), 18-44s vs over-45s, June 2020
Asian Canadians strongly influenced by online reviews
GENERAL ATTITUDES TOWARDS CREDIT CARDS
Unpaid balances are a significant source of stress
Figure 23: General attitudes towards credit cards, June 2020
Most consumers prefer using a physical card  
Figure 24: General attitudes (select) towards credit cards (% agree), 18-44s vs over-45s, June 2020
18-24s favour debit
Older consumers and women are more apprehensive about storing card info on their devices
Figure 25: General attitudes (select) towards credit cards (% agree), by gender, June 2020
Figure 26: Replace Your Lost or Stolen Credit Card, October 2019
Around a quarter of 18-44s have been rejected for a credit limit increase
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Consumer qualitative research
Abbreviations and terms