Canadians Continue Abandoning Cash, Move Towards Plastic
Looks like the putsch is almost complete! Cash is slowly being dethroned as king, with electronic payments ruling the roost.
According to a survey recently conducted online with over 1,000 Canadians by consumer research firm GfK, credit and debit card transactions now exceed cash transactions by a significant margin.
In 2015, 42% of Canadian transactions were made with credit cards, 28% with debit cards, and only 25% with cash. Interetingly, mobile payments still only represented 3% of total transactions.
Credit cards represented the largest share of all payments. Growth in Canadian credit card transactions, over debit, has largely been the result of cardholders increasingly using plastic for small sized purchases.
In an interview with the Canadian Press, Stephen Propeil of GfK Canada said “We also saw a number of years ago in this country a very concerted effort by the card companies to get people to start using their cards for smaller payments. That clearly has worked.”
With the rise of rewards credit cards, and the increasing richness of rewards programs for both premium and mass market cards, we see the trend continuing. The benefits of credit over debit or cash seem to be compelling – you never have to replenish your wallet, there are no transaction fees, you collect rewards, there are meaningful protections like extended warranty and there is zero fraud liability (lose your cash and it’s gone for good).
The study revealed that 53% of Canadians still seem concerned over their personal information when using a mobile app, with only 22 percent believing their mobile device was 100% secure.
However, “more boomers and more older retired Canadians from the silent generation are now acknowledging that mobile-payment systems are easier and faster and more efficient,” according to Popeil
“In many cases, how do we convince people that divulging certain things about their financial state via these systems is safe and secure? Once we’ve cracked that nut we’re going to see massive uptake on a lot of this.”
If we want people to start having more confidence in mobile payments, we have to start eliminating the massive breaches like those from Target, Hilton, Home Depot, TJ Max, Hyatt, Wendy’s and the list goes on.
While not ascribed to mobile payments per se, the mere fact that the payents industry has suffered through repeated and significant data breaches, means consumers will feel less confident attaching their payment device to a machine that carries all of their personal information as well, like a cell phone.
Regardless, as soon as more Canadian banks integrate with ApplePay, beyond just American Express, and more phones like Samsung, start introducing mobile payment platforms, we will see mobile’s share of transactions increase.