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Bank of Canada Survey: 51% of Point-of-Sale Transactions Are Cash

Canadians still use cash for more than half (51 percent) of point-of-sale transactions.

With that key takeaway from a Bank of Canada report on consumer payment behavior released earlier this month, the digital payments hype machine was forced to momentarily pause.  While Canadians have indeed reduced their cash usage from historic highs that predate the proliferation of debit and credit cards, as well as mobile payments, the Bank of Canada survey data is clear. Cash is still widely used by Canadians, and dominantly so for small-value transactions. 

Source: 2015 Retailer Survey on the Cost of Payment Methods

As the sole issuer of bank notes in Canada, the Bank of Canada conducts ongoing research and periodic surveys, tracking consumer payment preferences and the evolution of cash use. Accordingly, it’s in their best interest, from a production and cost-efficiency standpoint, to be as accurate as possible.

Key Findings

Analyzing point-of-sale transaction data from 2015 (most recent data available), the Bank of Canada has found that cash has the highest volume share (51 per cent) and the smallest value share (24 percent), indicating that consumers use cash frequently, and mainly for small-value transactions.

Crunching the numbers on median transaction value for cash and cards, the Bank of Canada research indicates Canadians have a strong affinity for cash when it comes to small purchases. On the whole, the analysis shows that cash is used primarily for small-value transactions, debit cards for medium-value and credit cards for the most expensive purchases. That's consistent for what's been reported in similar payment studies in the United States, as noted below.

Source:  2015 Retailer Survey on the Cost of Payment Methods

Reinforcing the continued role of cash as a popular way to pay for Canadians, cash’s domination of small-value transactions seemingly stems from consumers actively choosing cash even when they could pay by card. Consider, card acceptance is almost universal (98 percent) at large businesses, and fairly widespread (67 percent) at small and medium-sized businesses.

Interestingly, Canadians’ preference for cash when making smaller buys aligns well with the costs of payment methods to merchants, as analyzed by the Bank of Canada. According to those findings, cash is the cheapest payment method for merchants for purchases up to around $20. Credit cards are the costliest for all transaction volumes.

Source:  2015 Retailer Survey on the Cost of Payment Methods 

Cross-Border Comparison

The analysis of consumer payment behavior in Canada harmonizes well with how consumers choose and use cash at the point-of-sale in the United States.

For example, just as the Bank of Canada report shows cash has the highest transaction volume share (51 percent) for Canadian point-of-sale shopping, our 2017 Health of Cash Study found that among Americans, cash remains the most commonly used form of payment by a comfortable margin, used by nine out of 10 consumers in the past 6 months, and by 80 percent on a monthly basis.

Consumers in both countries also tend to use cash for low-value purchases, and cards for larger purchases. Over 80 percent of the consumers surveyed in the Health of Cash study agree that they use cash to pay for smaller items.  In turn, the Bank of Canada analysis surmised that cash is used mainly for small-value transactions, with the median transaction value for cash being approximately $8.

Of course, both the Bank of Canada research and our annual Health of Cash Study represent points-in-time of consumer payment behavior. How consumers on both sides of the border choose and use cash, cards and digital will continue to evolve as contactless cards, mobile wallets and payment apps provide people unprecedented choice in the way they pay. Even so, thus far cash is resilient in the digital age, and often preferred. 

Tom Pierce
Chief Marketing Officer 

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