Posted on Friday 27 August 2021
When was the last time that you used cash to buy something? If you’re among the 42 percent of Canadians who prefer to use contactless payments instead, you probably haven’t used cash in quite some time.
Canadians are increasingly shifting toward cashless payments, reaching for debit or credit cards instead of bills. It’s a shift that has been steadily progressing over the past decade. In 2017, a survey from Bank of Canada found that only 1 out of 3 transactions were paid for in cash. Even banks are taking notice of the shift and offering more options for online and mobile services to make contactless payments easier than ever.
Not only does cashless payment make sense from a space-saving perspective, decreasing the need to carry a wad of physical bills, but it’s often quicker and more convenient to swipe a card instead. And in a post-Covid world, where physical distancing is the new norm, cashless payments have become even more popular as a means of decreasing bacteria and virus transmission.
What does the future of cash look like in Canada? Let’s take a look at what the trend toward cashless payments might mean for you and for your wallet – both digital and physical. This is getting very popular with immigrants too.
When it comes to embracing cashless payments, North America is behind the curve. Much of Europe has already shifted toward using credit cards, debit cards, and online payment processors (like PayPal). Spain, Italy, the UK, Poland, and Germany are all examples of European countries that have adopted similar attitudes toward cashless payments.
Sweden might be the best example, as collective use of cash has significantly decreased to a nearly cashless society. Only 9 percent of Swedes are using cash! That’s a decrease of 30 percent within the last 10 years, marking a significant shift in the way that Swedes handle their money.
Why does Sweden prefer cashless payments instead of cash? Part of that dramatic shift is due to technology advances that make cashless payments easier and more convenient. For example, Klarna is a “buy now, pay later” platform that lets users split purchases into four payments over time. You can use the Klarna app to pay for both online and in-store purchases, which is a huge bonus for those who want to budget their purchases.
Another Swedish financial company, Zettle, is now owned by PayPal and offers a completely contactless point of sale system. With the simple swipe of a card (or even a tap), small business owners can easily accept and process payments. Even better, the PayPal Zettle app provides real-time sales tracking, reporting, and inventory management – all huge incentives for cashless payments.
Digital payments are definitely king for European consumers, but Canada isn’t all that far behind. Experts say that the expected in-store cash usage could drop to as low as 4 percent by 2021.
So if people aren’t digging into wallets and pockets for physical cash, what are they using instead? There are plenty of options for cashless payments in Canada. If you aren’t paying with cash, you’re probably using one of the following:
A tried-and-true favorite, credit cards have always been a great alternative to cash. Credit cards help establish and maintain your credit score, give you more spending power for daily necessities, and can provide a crucial safety net during a financial emergency. And if you use a credit card that offers cash back rewards or airline miles, you can get much more bang for your buck by opting for a credit card instead of cash or a debit card.
If you have a contactless-enabled card, you can make payments with just a simple tap on a payment terminal. And it doesn’t even have to be a card, either! Radio frequency identification (RFID) technology means that contactless payments could be enabled through a smartwatch, a smartphone, and more. (Pro tip: you’ll know if your card or device can make contactless payments if you see a wave-like or Wi-Fi symbol on it.)
Smartphones are a part of our daily lives, and because nearly everyone has their phone on them at all times, it’s only natural that cashless transactions would go mobile. You can make any number of mobile cashless payments through QR codes, banking apps, and even SMS. Apple Pay, Google Pay, Samsung Pay, and PayPal are all examples of easy ways to make mobile payments to businesses, friends, and family. If you have 2FA protection, they are a great way to protect yourself from fraud too.
Even retailers are getting in on the cashless transaction game, developing brand-specific apps that can be used to easily pay for goods and services. Uber and Starbucks are two great examples of how retailer apps can be used as a payment platform. Now, you can order, pay, and even tip directly through an app – without having to touch a single bill or coin.
No list of cashless transactions would be complete without including cryptocurrency. This is one of the newest and most disruptive forms of cashless transactions, and includes the original Bitcoin as well Dogecoin, Ethereum, Litecoin, Tether, and more. Because cryptocurrency is not backed or issued by a financial institution, it’s becoming increasingly popular for those who want to freely send and receive digital currencies across the globe.
Are cash-based payments going away for good? Not quite – cash might not be the preferred form of payment, but there’s plenty of it! Although the Canadian economy suffered a hit during the pandemic, cash circulation jumped $8.4 billion.
That’s a good sign for those who still prefer to hold onto cash, but don’t be surprised if you start seeing more and more businesses offering incentives for digital or card-based transactions. When it comes to spending, sending, and receiving money, the future is cashless!