Merchant Access to Cash: Going the Extra Kilometer?

The Bank of Canada has a mandate to make adequate arrangements for the supply of bank notes as required for circulation in Canada. Therefore, understanding access to cash for small and medium-sized businesses (SMBs) is essential. In this study, we measure SMBs’ access to cash using the driving distance to financial institution (FI) branches. First, we measure the distance between SMBs and their nearest FI branch. The average driving distance to the nearest branch ranges from 1.3 km in large urban census subdivisions (CSDs) to 6.9 km in rural CSDs. In addition, 84% of SMBs are within a 5 km drive of the nearest branch. Second, we use a sample of 651 SMBs from the 2023 Merchant Acceptance Survey to examine SMBs’ banking choices. We compute driving distance and driving time from each SMB to the nearest branch and to a branch of its chosen financial institution. The average distance to the nearest branch is 2 km, while the average distance to the chosen branch is 6 km. Fewer than one-quarter of SMBs bank with the financial institution that operates the nearest branch. Rural SMBs are more likely than urban SMBs to bank with the financial institution that operates the nearest branch.