Canadians Have No Plans to Go Cashless
The Bank of Canada has published research showing banknotes in circulation rose in the summer of 2020, cash use and holdings were up from spring of that year, and the majority of Canadians have no plans to go cashless.
Prior to the COVID-19 pandemic, circulating cash in Canada was around $83 billion. This increased to more than $96 billion in late September 2020, with cash withdrawals back to normal levels by mid-summer while deposits remained low. In a typical year, the Bank of Canada would expect an increase of $4.7 billion in cash. Between September 2019 and September 2020, cash growth rose by $13.1 billion.
The self-reported cash holdings of Canadians returned to pre-pandemic levels (median $70) in July 2020 after seeing a rise to a median $85 in April that year. In that period, the use of all payment methods had increased, with cash seeing the largest growth. This coincided with a relaxation of nationwide COVID-19 containment measures, and a corresponding rise of people making in-store purchases.
78 percent of Canadians reported they have no plans to go cashless in the next five years. This is an increase of four percent over the previous report, conducted in April 2020. Additionally, the share of people stating they are already cashless went down to 14 percent (from 19 percent in April).
Of the respondents who reported that they are already cashless, more than half had cash on hand, so their stated behaviour was not consistent with their actual behaviour.
During the July 2020 survey period, 54 percent of Canadians made cash payments. While this is somewhat lower than the proportion using credit and debit cards, it remains a significant percentage and also showed an upward trend throughout the year, growing from 36 percent in April. Also, fewer people experienced a merchant refusing to accept cash in July compared with April (down to nine percent from 12 percent).
The report concludes that increased demand for banknotes—a phenomenon seen in other advanced economies, including Australia, Germany, New Zealand, the UK and the U.S.—was driven more by high-denomination than low-denomination notes, suggesting that store-of-value was an important factor.
In times of uncertainty, people turn to cash as the most reliable way of paying for vital goods and services. The COVID-19 pandemic—as with disasters and economic crashes before it—has underlined the need to preserve and protect cash as a payment choice for occasions when people cannot, or do not want to use cashless options.