Cash is Canada’s Common Denominator

Canada has seen a recent shift in payment behaviour—as have many countries worldwide—with consumers increasingly exploring new options. A recent article in This Magazine explores the continued value of cash in this landscape and what it means for Canada’s financial future.

With 15 percent of Canadians considering themselves heavy cash users, there are many reasons why physical money remains not only key to basic payment choice, but an irreplaceable part of the financial world. Keah Hansen, a doctoral candidate and freelance writer based in Toronto, notes that for businesses, cash offers the simple advantage of incurring no processing surcharges, meaning they get to keep more of the profit. For small businesses, such margins can add up significantly which is why the Canadian Federation of Independent Business (CFIB) has appealed to consumers to pay cash.

Beyond businesses, Hansen reports that in 2019, 80 percent of Canadians said they made at least one cash transaction per week. While spending behaviour has been impacted by the pandemic, experts are predicting a rebound in cash usage, and physical currency offers unique benefits that make it irreplaceable.

The reliability of cash in uncertain times has seen people worldwide withdrawing it to hold as a store of value and an emergency option, should other payments fail. In America, it’s reported to be a popular payment choice for young people (Gen Z) and is the preferred option across all ages for budgeting—offering a tangibility that helps people control their spending—and, of course, for emergencies. There are also those for whom other options are unavailable, such as the unbanked or underbanked (three and 15 percent of Canada’s population respectively).

With the Bank of Canada reporting cash use is rising, demand for notes and coins remains buoyant, and 80 percent of citizens have no plans to go cashless.