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Are Canadians Using Less Cash? Let’s Find Out

They say cash is king, but in a world of tap payments and cards stored on our wallets, does actual physical cash matter anymore?
3-1 Cash
Photo by PiggyBank on Unsplash

This question has been a topic of discussion for decades but picked up steam once the pandemic hit. Since then, people have been less and less likely to carry and handle physical money. Does this mean the death of the loonie is close behind?

The Fall and Rise of Cash in Canada

According to IPSOS, Canadians saw a 4% drop in using cash between 2014-2019. In the first six months of 2020 alone, we saw an 8% drop. In that same time, perhaps in a bid to go contactless in the midst of a pandemic, Canadians increased their use of credit cards for their everyday transactions as well. Curiously, using debit cards remained stable throughout this entire time.

Despite these changes in how we pay for things, the loonie is still going to be around for awhile. In fact, as things began to open up at the end of 2020, we were already seeing a bounce back of using cash. More people were using it, more was in circulation and, more importantly than that, most Canadians did not see themselves going cashless in the next five years. This was all found in a study released by the Bank of Canada in July 2021.

Who’s Going Cashless, and Who’s Getting Left Out

Of course, all of these trends are subject to demographic changes. Unsurprisingly, younger adults are far more likely to use cards and contactless methods to pay for things. This makes sense as early adopters are people more likely to own smartphones and smart watches.

As for those negatively impacted by the trend towards cashless, that would be those without bank accounts and anyone who relies on cash. In the States, one-quarter of Americans are unbanked or underbanked, meaning they either don’t have an account or don’t use it. While you may think that is primarily the unhoused, remember that many industries, especially hospitality, still move cash around in large amounts.

Even as Canadians say they have about the same amount of cash in their homes as ever, that money is increasingly in $50 and $100 bills. Not exactly the type of money getting given to strangers.

If you think the jingle in your pocket is going to be replaced by your smartphone, you are likely right in the long run. In the next five or 10 years, though, no one would be surprised if cash remains a major part of our everyday payments.

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