Article

ATM card circulation in Canada predicted to reach nearly 125 million by 2016

While card circulation is increasing, withdrawals are decreasing.

October 27, 2011

The number of ATM cards in circulation in Canada is predicted to reach 124.5 million by 2016, according to CompaniesandMarkets.com, a report and research aggregator. ATM cards are expected to grow at a similar rate to the number of credit and debit cards.

In 2011, ATM cards grew by 5 percent to reach 112 million. Conversely, the number of ATM transactions fell by 3 percent in 2011 to total 759 million.

Canadian consumers shifted away from ATM withdrawals as a means to purchase goods and services, instead demonstrating an increasing preference toward debit payments even for small ticket purchases. The constant value of ATM transactions is expected to continue its downward trend over the forecast period, with a CAGR of -4 percent to total C$35 billion by 2016.

"The growth seen in the number of ATM cards in circulation is largely due to the growth in debit cards which also carry ATM functions," said Mike King, CEO of CompaniesandMarkets.com. "The ability to obtain cashback at an increasing number of point-of-sale terminals has undoubtedly contributed to the decline in ATM use."

After witnessing strong growth in the past few years, there were minimal increases in the number of ATMs in 2010 and 2011, as the category approached saturation in terms of new ATM locations.

However, King said the most significant trend behind the declining use of ATMs is in Canadian consumers' shift toward making purchases directly with their debit card.

It is important to note that it is not just cash withdrawal transactions at ATMs that declined toward the end of the review period. The most often used services offered by bank-owned ATMs, which include deposits, transfers and bill payments, have suffered a similar decline.

The number of bill payments and transfers carried out at ATMs dropped by 5 and 7 percent respectively, according to statistics from the Canadian Banker's Association. This phenomenon can be explained by the increased use of banks' online services to carry out functions which were previously realized at ATMs.

Competitive landscape

There was an important change in terms of fraud liability for those using the Visa and MasterCard networks. As of 2010, the cardholder is no longer liable and instead the ATM service provider and processor are held liable if they accept magnetic-stripe cards instead of chip and PIN cards.

"This has caused some ATM operators to deactivate a network (Visa or MasterCard) to avoid liability of fraud due to non-chip compliance. For its part, the Interac network has stated that magnetic-stripe debit card transactions will no longer be accepted at ABMs (automatic banking machines) from the end of 2012," King said.

After signing agreements in 2010 with UnionPay, a bankcard association in China with more than 2.3 billion cards issued worldwide, and PULSE, the largest ATM/debit network in the U.S., the Interac network's international card acceptance service expanded to more than 50 percent of the Interac network of ATMs.

The service provides UnionPay, Diners Club International, Discover and PULSE cardholders the ability to withdraw money from ATMs of participating acquirers in Canada.

Interac continues to be the sole ATM transactions processing network in Canada. Although both Visa and MasterCard appeared to be moving toward setting up their own networks in Canada, the government's new code of conduct, which went into effect in 2010, appears to have put an end to these plans, at least for the time being, as there have been no concrete signs of Visa or MasterCard setting up their own networks in Canada thus far after the introduction of the code.

The ATM Transactions in Canada report establishes the size and structure of the market for ATMs cards, smart cards, credit cards, debit cards, charge cards, pre-paid cards and store cards. It looks at key players in the market (issuers and operators), number of cards in circulation, numbers transactions and value of transactions.

For more information, visit our trends/statistics research center.