How Canadians pay for things

From cash to contactless cards—what’s in our wallets?

Kim Huynh
Kim Huynh

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As the central bank and sole issuer of bank notes in Canada, the Bank of Canada needs to stay on top of payment trends. Every four years, we reach out to Canadians to ask them how they pay for things.

Canadians are shifting away from cash

Our 2017 survey shows that paying with cash continues to decline, both in the number of transactions and in their value.

Cash is now used in one transaction out of three, or 15% of the total value of goods and services purchased.

The situation is by no means unique to Canada—several other countries have observed similar trends.

So, does this mean that Canadians are giving up on cash? The short answer is no. Canadians still rate cash as easy to use, low in cost, secure and nearly universally accepted, and it’s the preferred payment option for small-value purchases like a cup of coffee or a muffin.

In fact, the lower the value, the more likely it is the buyer will choose cash.

Cash is popular for small-value purchases.

Credit and debit are the top choices for larger transactions

Payment cards such as credit or debit cards are the most popular alternative to cash, and over the years, more people have acquired these cards. Nearly everyone in Canada owns at least one debit card, and about 9 out of 10 of us own a credit card.

Credit and debit cards have become more popular for payments in all value ranges.

Credit cards are an increasingly common payment method—they now make up 39 percent of retail transactions and 56 percent of the total value of goods and services purchased. They are especially popular for transactions above $15. While popular overall, debit cards did not take the top spot for any type of good or service, or in any transaction value range.

Other methods of payment have become more widespread in Canada since 2013.

What this means for us

While the use of cash for payments is on the decline, our survey found that Canadians still use cash for a big share of their purchases. They are not ready to move entirely to electronic forms of payment.

Because we design, produce and distribute Canada’s bank notes, we are monitoring trends in how people make payments and how they might conduct transactions in the future. These trends matter:

  • Access to cash: If there is a gradual transition away from cash, what does this mean for groups who tend to rely more on bank notes to pay for goods and services, such as seniors and people with lower incomes or limited access to credit?
  • Emergencies: What happens if a system outage, major cyber incident or natural disaster paralyzes a critical part of the electronic payments system?
  • Privacy and security: Bank notes offer security and anonymity. What does it mean for Canadians’ data privacy and security if there is a further shift toward electronic transactions?

We are working hard to better understand these trends, prepare for the future and ensure Canada’s payments system remains safe.

Studying the trends in how people use and hold cash helps us understand why some countries, like Sweden, have moved more rapidly than Canada toward a cashless society and whether there are lessons for us.

Our research also looks at the pros and cons of a central bank digital currency and under which conditions it could make sense to issue one. For the foreseeable future, though, we will continue to supply Canadians with bank notes they can use with the highest confidence.

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