Cash dethroned for Canadian small businesses

Majority of small businesses do fewer than 25 per cent of their transactions in cash but still feel obligated to accept it 

October 29, 2019 - Cash payments continue to decline in favour of digital payment types, according to the annual Payments Pulse Survey: Small Business Edition from Payments Canada released today.

This year’s survey, which focuses on the payment trends, interests, and views of Canadian small businesses, revealed nearly 80 per cent of small businesses surveyed are conducting fewer than 25 per cent of their transactions in cash, compared to 65 per cent in 2018. The year-over-year jump signals that cash is continuing to lose ground as a preferred method of payment as consumers increasingly choose alternative payment options. 

Despite this decrease in the number of cash transactions, most (71%) small businesses surveyed say they still feel an obligation to continue accepting cash as a method of payment and more than half (61%) consider accepting cash as a key to their success.

“Small businesses are an integral part of the Canadian economy and providing convenient payment options at the point-of-sale is key to their success,” said Tracey Black, Executive Director, Modernization, Payments Canada. “The modernization of Canada’s payments systems is setting the stage for new and enhanced payment options, and creating a platform for innovation that will allow member financial institutions and payment service providers to offer their customers enhanced, data-rich payment options and experiences.” 

Other key findings from the 2019 Payments Pulse: Small Business Survey Edition include:

  • Efficiencies: respondents say the most efficient forms of payment methods to process are non-cash transactions, including e-transfers (27%), cheque (17%), credit card (19%), automated funds transfer/direct deposit (14%) and debit (6%).
  • Request for data-rich payments: more than half (63%) of respondents say their business would benefit from sending and receiving more data/information with an electronic payment, and 64 per cent say they would likely use digital payments (give up cheques and cash) if they could send and receive more data/information with a payment.
  • Adoption of new payment methods: seven-in-ten (68%) small businesses feel they could be encouraged to adopt digital payments within their business, particularly if they have a clear return on investment (36%). Two-in-ten also feel that having some personal support or coaching  (22%), grants/funding to pay for the technology (21%) and the provision of educational resources (19%) would encourage them to adopt digital payments.

Payments Canada’s Modernization program is enhancing Canada’s payment infrastructure  so that financial institutions and other payment service providers can offer secure and innovative products and services for small businesses. Initiatives like the introduction of real-time payments and support for the ISO 20022 messaging standard will provide small business owners with the flexibility to pay and be paid the way they want. The provision of payments data that travels with the payment will support operational efficiencies for businesses of all sizes. 

“The future of Canada’s payments system looks bright for small business owners. Payments Canada, financial institutions and government continue to move toward the introduction of a secure, faster, data-rich payments environment,” Black added. 

The 2019 Payments Pulse: Small Business Edition was undertaken by Leger and Payments Canada between September 17, 2019 and September 24, 2019. An online survey of 300 Canadian small business owners of companies with less than 499 employees was completed using Leger’s online panel. The margin of error for this study was +/- 5.6%, 19 times out of 20. Each May, Payments Canada also conducts a payments pulse survey focused on consumers.

Review the 2019 Payments Pulse Survey: Small Business Edition for detailed results.

About Payments Canada

Payments Canada ensures that financial transactions in Canada are carried out safely and securely each day. The organization underpins the Canadian financial system and economy by owning and operating Canada’s payment clearing and settlement infrastructure, including associated systems, bylaws, rules and standards. The value of payments cleared and settled by Payments Canada in 2019 was over $55 trillion or $218 billion each business day. These encompass a wide range of payments made by Canadians and businesses involving inter-bank transactions, including those made with debit cards, pre-authorized debits, direct deposits, bill payments, wire payments and cheques. Payments Canada is a proud supporter of the Catalyst Accord and the 30% Club.

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