These days, we are making fewer cash transactions than ever before. Even for the smallest purchases, contactless payments are becoming the norm, a trend that has accelerated in light of recent global events.
Of course, there are still some situations in which only cold, hard cash will do, but even these are becoming steadily fewer.
In Canada, there are even signs that paying by cash might be going the same way as writing a cheque. Could this be one of the first nations to become a genuinely cashless economy? And will the rest of the world inevitably follow?
Canadians love their tech
Canada has always been one of the more progressive nations when it comes to cashless payment. Across the border, there is strong emotional attachment to the US dollar, and cash remains the most popular payment method in the USA. In Canada, it’s another story entirely. Recent research by Euromonitor found that more than 70 percent of personal purchases are card-based.
However, even physical plastic cards are likely to be overtaken in the near future. Canadian smartphone penetration stands at around 85 percent of the adult population, which is about the same as the UK and significantly higher than the US. Already, Canadians use their smartphones to settle up for about 25 percent of online transactions, and payments apps are increasingly being used in the “real world” too.
The COVID effect
There has been a steady decline in the use of cash over the past decade. While there are several reasons for this, the most prominent has always been convenience. Why waste time with ATM withdrawals or burden yourself with pockets full of small change when you can just buy that cup of coffee with a wave of your card, or even your phone?
The move away from cash has been even more pronounced over recent months. Retailers have been either strongly discouraging or flat refusing cash transactions for reasons of hygiene. The results have been plain to see across the world, but in Canada, the number of contactless transactions increased by four percent since the start of the crisis – this in spite of the overall number of people leaving their homes to enter shops dropping so dramatically.
Ecommerce and online wallets
With the rise of mobile payment platforms and apps, it is not just physical money that is becoming obsolete in Canada. Even physical wallets are becoming less relevant than their virtual counterparts.
The advent of e-Wallets is a direct consequence of the increase in online purchases coupled with lingering concerns that many consumers have about sharing too much personal and financial information online. PayPal was, of course, the pioneer here, and it has quickly been joined by alternatives, including Skrill, Neteller, iDebit, and several others. Especially online gambling sites have accelerated the popularity of these platforms in Canada. Here you can find a full overview of iGaming payment options currently available for Canadians.
A gradual process
Canadian citizens and businesses have been forsaking the cash with so much enthusiasm that the Bank of Canada has felt compelled to issue some words of warning. The bank has urged retailers not to cease cash transactions entirely, adding that there is a significant proportion of the community that does not have access to other methods of payment. In a studylast year, the bank reported that around nine percent of the population have stopped using cash completely.
That’s a significant number, but when you turn it on its head, it means 91 percent still use cash, at least for some things. Undoubtedly, if the bank decides to run a similar study after the current crisis is behind us, it will find that number will have dropped. However, it is unlikely to be as low as Sweden’s where only 15 percent still use cash. Again, that statistic came from the pre-COVID era, so we can reasonably assume it is now even lower.
Does cash still have a role?
The benefits of going cashless are clear to see. More convenience, better hygiene and reduced opportunities for criminals. But at the same time, cash is so ingrained in our society that there could be real challenges if we did away with it entirely.
Consider the delivery driver who goes above and beyond by carrying a heavy box up the stairs, or the token of appreciation for the postman or the paperboy at Christmas. More seriously, how about those down-on-their-luck individuals sitting on the street to whom you give your spare change? A street nurse in Toronto said that the city’s homeless immediately noticed that fewer passers-by were carrying cash when the pandemic began.
Without doubt, the cashless society will come, and Canada is clearly one of the nations that is leading the way. But the process needs to be gradual to ensure it really is for the benefit of all.
