Does it surprise you that the majority of sales in Canada are still done in cash? It probably surprises some people, especially those who know that millennials prefer using their credit cards as their main method of payment. In fact, on average, millennials do about 57 percent of their spending using them.
While that might be the case for millennials, that isn’t the case with Canada’s population as a whole.
The Bank of Canada has recently announced that more than half of Canada’s transactions are completed in cash. The number was 51 percent, to be exact.
The Rise of the Credit Card
The Bank of Canada found that, while the majority of the purchases Canadians made in 2015 were in cash, many larger ticketed items and costlier items were completed with credit cards. For those kinds of items, people tend not to have the cash to pay everything up front in one large sum.
The bank also found that, even though the number of cash transactions was larger than that of credit card transactions, the overall dollar amount spent on credit cards was higher than the transactions made with cash.
The Trouble with Credit Cards for Merchants
For merchants, there is one major problem associated with credit cards: Processing a credit card transaction costs about $2.08. In comparison, processing a debit card transaction only costs approximately 30 cents, and processing a cash transaction costs 29 cents. Merchants definitely prefer when people pay with cash because they don’t have to waste money paying transactions fees to credit card processing companies.
However, the cost of accepting cash is only low when retailers use automated cash management solutions to cut their labour expenses, reduce the margin of error, reduce shrinkage, and increase efficiency in the cash management process.
The Ease of Cash
For many Canadians, while there is an ease to using a credit card, there’s a better feeling when cash is used. When you use cash, your purchases don’t come back to haunt you because you’ve paid for them immediately. You know exactly how much you’ve spent based on how much money is left in your wallet, and it makes the purchasing of items so much easier because everyone accepts cash. Not everyone accepts every type of credit card. Cash also isn’t dependent on machines working. Cash works all of the time.
For a company, it’s important that you’re able to quickly and easily count the cash you’ve taken in during a business day. Canadians might prefer using cash, but there is a slight headache for merchants because they have to count it. For counting money, there’s no better tool for a business to have than a cash counter machine. It makes counting the daily cash quick, easy, and painless.
Cash Is Here to Stay
Cash is here to stay for the foreseeable future, and we can say that fairly confidently after the Bank of Canada’s report. People prefer to use cash when possible because it’s reliable, easy to use, and always accepted. In some industries, cash sales are actually increasing, which is great, but it also means merchants need to be aware of cash handling problems that could arise.
The majority of sales in Canada are still done in cash and that’s a relief to many merchants. Cash is something that’s easier and more cost effective for merchants to process when they have the right cash management solutions in place.