Anxiety about money and personal finances is running high among young Canadians during the COVID-19 pandemic, according to a recent survey from Interac Corp. With over half of Gen Z adults and Millennials (53 per cent) reporting to be more concerned about managing their finances than ever before, these generations are using digital payments to track their spending and say paying with debit helps them feel in control.
“The adoption of digital payments has accelerated over the course of the pandemic for reasons beyond convenience alone,” said William Keliehor, Chief Commercial Officer, Interac Corp. “In fact, our research reveals that younger Canadians value digital payments for the insight they provide into their spending habits and are turning to debit payments as a money management tool.”
According to the survey, young Canadians’ fears of overextending themselves financially are heightened (50 per cent of Millennials; 47 per cent of Gen Z adults), as compared to Baby Boomers (31 per cent) and the Silent Generation (36 per cent). In this context, staying within budget is a key focus, and half of Millennials and Gen Z adults (50 per cent) are using digital payments to keep track of their spending in real time.
This mindset is reflected in the way young Canadians are using the Interac e-Transfer® service to split bills, share costs and keep a record of their spending. For example, nearly six in ten Gen Z adults (57 per cent) and half of Millennials (50 per cent) have relied on the service during the pandemic to receive money or pay others back for everyday errands such as grocery shopping. This has contributed to a 55 per cent growth in overall Interac e-Transfer transactions between April-August 2020, in comparison to the same period last year. A total of over 66 million Interac e-Transfer transactions took place in August 2020 alone1.
The broader role of debit in personal financial management is apparent. Seven in 10 Millennials (72 per cent) and nearly two thirds of Gen Z adults (65 per cent) believe that Canadians should have the option to use debit no matter if they are checking out online, making an in-app purchase or paying in store. These generational cohorts report that using debit makes them less likely to buy something they don’t need (52 per cent of Millennials; 57 per cent of Gen Z adults) and allows them to feel in control of their money (56 per cent; 48 per cent respectively). In turn, 67 per cent of Millennials and 59 per cent of Gen Z adults say being in control of their spending lets them feel more optimistic for their financial future.
“The research findings speak to the positive role that digital payments can play in giving Canadians a sense of everyday financial control at a time of great uncertainty. As the fintech community continues to innovate, it’s critical that ability for Canadians to use their own money remain a priority,” added Keliehor.
Other key findings from the survey include:
- More than six in 10 Millennials (64 per cent) and almost six in 10 Gen Z adults (58 per cent) increased the frequency of their use of digital payments during the pandemic
- Almost half of Canadians (46 per cent) say their use of the Interac e-Transfer platform has increased during the pandemic. Currently, five in 10 (52 per cent) are using the Interac e-Transfer service at least twice a month, versus nearly four in 10 (39 per cent) prior to the pandemic
- Over half of Millennials (58 per cent) and Gen Z adults (54 per cent) are spending more on essentials but less on discretionary purchases than they did pre-pandemic
- Half of Millennials (53 per cent) say the pandemic has made them more cautious about going into debt
- Looking to the future, six in 10 Gen Z adults (62 per cent) want to take more control over their spending post-pandemic, while 63 per cent of Millennials intend to make their finances more resilient in case another crisis occurs
Use of Interac products during the COVID-19 pandemic
- Usership of the Interac e-Transfer service is at an all-time high, with the number of monthly senders growing by 18 per cent and recipients growing by 16 per cent since February 2020.
- 325 million Interac e-Transfer transactions took place between April-August 2020, increasing from 210 million in the same period in 2019
- In addition to using the service to share costs for everyday errands, the survey shows Canadians are turning to the Interac e-Transfer platform to send money to friends or family members in need during the pandemic (33 per cent), and to pay for purchases in online marketplaces (24 per cent)
- Increasingly, businesses are also using the platform to accept payments for services and pay their bills. For example, 21 per cent more businesses were receiving Interac e-Transfer transactions in August, than in February 2020.
- Meanwhile, payment transaction records show that after an initial dip in spending in mid-March, Interac Debit use has increased by 66 per cent in August as compared to April 2020. Interac Flash (contactless debit) transactions have increased by 74 per cent in the same period. For example, Interac Flash transactions are up 85 per cent in restaurants and other eating places including fast food outlets, and 44 per cent in grocery stores and supermarkets within this period.