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Can Canada go Cashless?

Global News | Alley Wilson & Anne Gaviola  | Oct 29, 2022

Customer at Aisle24 - Can Canada go Cashless?Whether you pay by debit, credit, mobile wallet or smartwatch, speed and convenience are driving the way Canadians are choosing to pay, but it all comes with a price — cash as a payment option is steadily declining.

  • Cashless is Trending
    • Pandemic: The spike in digital adoption was fuelled in part by the pandemic, as Canadians turned to virtual, mobile and online payment transactions in record numbers.
    • Payment options:  In Canada, credit cards remained the top method of payment followed by debit, with Canadians reiterating ease, speed and convenience as the reasons they opt for plastic over cash, according to Payments Canada’s most recent report.

See:  Cashless society: We need to take digital jail seriously

  • With Canadians opting for more contactless, digital forms of payments, more doors open for newer, more futuristic in-store shopping experiences, like Aisle 24.  “We have people coming into our stores with nothing but their phones or nothing but their watches because that’s the trend,” says Yong, adding that most customers are in and out of Aisle 24 within five minutes.
  • Trust:  "Part of Canada’s success with switching to contactless forms of payment is that we trust the technology" - Mark Hayward, Associate professor at York University
  • A recent Global Payments Report projects that by 2025, cash will only make up three per cent of all point-of-sales transactions in Canada — one of the lowest cash payment rates in the world.
  • We need to think about equal access to services:  Hayward says a cashless society isn’t just about the selling and purchasing of items, but it’s a much broader question about caring for everyone around us and making sure everyone has equal access to services.
    • We can think about this in terms of older users who don’t want to use new technology. We can think about this in terms of unhoused people who may not have bank accounts for whom access to digital commerce may be very difficult.”
    • There are still a lot of businesses that rely on cold, hard cash.  “The cafe down the street is still cash only. The liquor and lounge across the street, they’re cash only. The barber shop where I get my haircut, she’s cash only,” she says. “There are a lot of cash-only places.”

See:  Card Usage is Declining to Digital Wallets: Fee Structure is Unsupportable and Facing Competition

  • In a report, Nye wrote that even though cash transactions are declining, demand for cash was at its highest level in 60 years. Nye adds the reason why Canadians stash cash during tumultuous times is because it provides a sense of comfort and security.  “It protects against things like cyber vulnerabilities, potential power outages, telecom outages like we saw this summer. There’s some safety that’s afforded by having access to physical cash.
    • Although experts like Nye believe Canada is still a long way from becoming a truly cashless society, there’s still talk of new currencies and services, such as micro-payments, buy now pay later, crypto or even central bank digital currencies, which our central bank, the Bank of Canada, is studying.

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NCFA Jan 2018 resize - Can Canada go Cashless?The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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