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Payment Acceptance Trends Among Small Merchants in Canada (307934)

Keywords: Cash, Debit and credit cards, retail payments

Reports from Bank of Canada surveys show that cash has been on the decline at the point of sale. In 2009, about half of all transactions at the point of sale were made using cash, but this share has since dropped to about a third in 2017. Despite this, overall cash demand, as measured by the total value of bank notes in circulation, has been relatively stable at about 3 to 4% of GDP for more than three decades. This puzzle has sparked Bank of Canada research into alternative sources of cash demand, and discussions of whether Canada is trending towards a cashless society. We complement this research by examining the other side of the market: businesses.

In 2014, the Bank of Canada surveyed merchants as part of a broader study on the cost of retail payments. Since then, the rise of digital payments has raised questions about the extent to which Canadian merchants have stopped accepting cash. Examples of such cashless merchants can be found in the news, but the question remains whether these are niche businesses or signals of an overall trend in cash acceptance. To answer this question, the Bank commissioned a follow-up survey of small businesses in 2018. We compare results to 2014 to see how trends in acceptance have changed in the past 4 to 5 years.

We find that mobile and Interac e-Transfer acceptance are on the rise, while cheque acceptance declined by half. On the other hand, cash and card acceptance did not change significantly from 2014 levels. Cash remains to be accepted by about 96% of small businesses in Canada. Further, less than 10% of businesses expressed that they planned to stop accepting cash within the next 5 years.