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Payment choices for everything from groceries to salaries continued to trend heavily towards digital methods in Canada in 2023, a report found — but it also reveals a jump in the use of cash.
The report by Payments Canada, the organization that runs the country’s payments infrastructure, analyzed some 21.7 billion transactions made in 2023 involving around $11.9 trillion. It found Canadians made 15 per cent more cash transactions in 2023 compared with the previous year, spending $62.6 billion versus 2022’s $60.1 billion.
Jon Purther, Payments Canada’s director of research, told Yahoo Finance Canada in an interview the reasons for this rise are varied, including convenience, debt avoidance, and a wariness of having limited payment options.
“Canadians are concerned about a cashless society,” he said. “They want to know that if they need to go to their back pocket and use cash, that it’s available to them.”
Also, Canadians are not as worried about germs as they were during the COVID-19 pandemic. Payments Canada notes that the proportion of Canadians who are “uncomfortable handling cash” dropped from 42 per cent in September 2020 to 22 per cent in June 2023.
The types of transactions covered by the report are vast, ranging from a cookie purchase at a cafe to paying an employee’s salary to transferring a down payment for a home. The 2023 figures, defined by a wavering economy, demonstrate “modest growth in both volume and value,” the report says.
Online payments rise
In spite of cash’s 2023 rebound, its use pales in comparison to digital payment methods. Electronic Funds Transfers (EFTs), which include wage payments and other higher-value transactions, averaged $2,279 in 2023 and made up 61 per cent of the total value. Although the report found that 49 per cent of Canadians “frequently used cash,” cash transactions tended to be for day-to-day purchases or payments and averaged $26, accounting for 0.5 per cent.
Over the last 10 years, the report says, “credit and debit cards, and more recently, online transfers, have gradually replaced cash as Canadians’ preferred payment method of choice for everyday use.” It says key factors in that shift to digital forms include the ease of making contactless payments, ability to earn loyalty rewards, better tracking of expenses, and greater security.
The volume of online payments — using systems such as Interac e-transfer or PayPal — has gone up 135 per cent over five years, the report says, and the value of transactions is up 160 per cent. And those growth rates are actually substantially lower than the five-year growth rates for previous years, where they exceeded 200 per cent, “suggesting that usage has become widespread and is approaching market maturation,” the report notes.
Meanwhile, over five years, the total value of cash transactions has dropped four per cent and cheques 20 per cent. Payments using those forms will likely continue to decline over the long term, Purther says, but they’re very unlikely to disappear completely. Payments Canada found that 55 per cent of Canadians say they have no desire to “go completely cashless.”
“I think this greater comfort with electronic channels will mean that we’ll see this continued growth, this continued movement to digital,” Purther said.
“I mean, digital represents over 75 per cent of total payments, and I think that growth will continue … but I don’t think we’re going to see paper channels going away any time soon.”
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf.
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