Amid Canada's $12 trillion in payments, cash makes a comeback
Payment choices for everything from groceries to salaries continued to trend heavily towards digital methods in Canada in 2023, a report found — but it also reveals a jump in the use of cash.
A report reveals that payment preferences for various transactions, including groceries and salaries, have increasingly shifted toward digital methods in Canada in 2023, although there has also been a notable rise in cash usage.
The report from Payments Canada, which oversees the country's payment infrastructure, analyzed approximately 21.7 billion transactions totaling around $11.9 trillion. It found that Canadians conducted 15 percent more cash transactions in 2023 compared to the previous year, spending $62.6 billion, up from $60.1 billion in 2022.
Jon Purther, Payments Canada’s director of research, explained to Yahoo Finance Canada that the reasons for this increase are diverse, including convenience, avoiding debt, and concerns about having limited payment options.
“Canadians are concerned about a cashless society,” he said. “They want to know that if they need to go to their back pocket and use cash, that it's available to them.”
Additionally, Canadians appear less apprehensive about germs than during the COVID-19 pandemic. The report notes that the percentage of Canadians who feel “uncomfortable handling cash” fell from 42 percent in September 2020 to 22 percent in June 2023.
The report encompasses a wide range of transactions, from buying cookies at a cafe to paying an employee’s salary to transferring a down payment for a home. The 2023 data, which reflect a fluctuating economy, indicate "modest growth in both volume and value," according to the report.
Online payments increase
Despite the resurgence of cash in 2023, it still lags far behind digital payment methods. Electronic Funds Transfers (EFTs), which include wage payments and other high-value transactions, averaged $2,279 in 2023, accounting for 61 percent of the total transaction value. Although 49 percent of Canadians reported "frequently using cash," cash transactions were primarily for everyday purchases, averaging $26 and comprising only 0.5 percent of the total.
Over the past decade, the report states that “credit and debit cards, and more recently, online transfers, have gradually replaced cash as Canadians’ preferred payment method for everyday use.” Key drivers of this shift to digital forms include the ease of contactless payments, the ability to earn loyalty rewards, improved expense tracking, and enhanced security.
The volume of online payments, utilizing platforms like Interac e-transfer or PayPal, has surged by 135 percent over the past five years, with the value of these transactions rising by 160 percent. However, these growth rates are significantly lower than previous years, where they exceeded 200 percent, indicating that usage has become widespread and is nearing market maturation.
Meanwhile, over five years, the total value of cash transactions has declined by four percent, while cheque usage has dropped by 20 percent. Although cash and cheques are likely to continue their long-term decline, Purther believes they will not disappear entirely. Payments Canada found that 55 percent of Canadians do not want to “go completely cashless.”
“I think this greater comfort with electronic channels will mean that we'll see continued growth and movement toward digital,” Purther stated.
“Digital accounts for over 75 percent of total payments, and I believe that growth will persist … but I don't think we’re going to see paper channels disappear anytime soon.”
