Canadians continuing to move away from using cash study finds

C-store operators are likely more aware than most that Canadians are fast moving away from using cash to pay for their items and gasoline purchases.

A new study from Payments Canada highlights how quickly Canadians are moving to a cashless society.

The research firm’s annual Canadian Payment Methods and Trends 2023 report, which analyzes 20.5 billion payment transactions made in 2022 totaling $11.7 trillion (more than $475 billion every business day) and highlights several key trends shaping the Canadian payment landscape.

A key finding in the study is that transaction volumes and values across all payment types, except for traditional cheques, experienced year-over-year growth in 2022. Credit cards represented 33% of all payment volumes in 2022, followed by debit cards (31%); electronic funds transfer (15%); cash (10%); online transfer (5%); cheque (2%); ABM (2%); prepaid cards (2%).

Credit card volume increased 5%, while debit card volume increased 6% year-over-year in 2022 compared to 2021.

When looked at more closely, the average credit card transaction value was $99, while the average debit card transaction value was $47. While cash use did show a small uptick in usage, the average cash transaction by Canadians was small as compared to that of credit cards and debit cards. The average cash transaction values were only $29.

Cash use grew 2% in volume, with the average cash transaction value at $29.

"We have seen a dramatic shift towards digital payment options over the past five years. Evolving technologies will continue to influence how Canadians make and receive payments," says Tracey Black, president and CEO of Payments Canada. "Payments Canada continues to work collaboratively with the payment ecosystem to provide Canadians and Canadian businesses with convenient, safe and efficient payment options."

Although cash use has declined over the past five years, cash will still be used as a store of value and means of payment. Close to half of all consumers (49%) and businesses (46%) in Canada believe that retail outlets will be completely cashless in the next ten years. Yet, two out of five consumers and businesses (45% and 41%, respectively) would feel uncomfortable if they could not use cash for making purchases.

Credit card usage is well positioned to grow as Canadians continue to embrace mobile payments at the point-of-sale and mobile commerce. In 2022, 57% of mobile wallet users in Canada reported using their credit card(s) linked to their mobile wallet for their purchases.

Prepaid cards are expected to experience the highest growth in both volume and value over the next few years compared to all other payment cards. Prepaid card usage increased among Canadian youth (14-18 years) as parents leveraged open-loop cards to provide an allowance and to track spending, in addition to international students spending money received from home. Innovation will continue to transform the prepaid card space with solutions ranging from remittance cards and gift cards to cryptocurrency payments.

Thinking about the future of digital payments, 65% of Canadians would send their payments in real-time if the option was available.