OTTAWA - Canadians are now using cash for fewer than half of their transactions, a survey done for the Bank of Canada suggests.
Instead, shoppers are increasingly reaching for their credit card and new technology that allows customers to just tap their card and pay.
The research by the central bank's Ben Fung, Kim Huynh and Gerald Stuber was included as part of the spring edition of the Bank of Canada Review on Thursday.
"Innovation in retail point-of-sale and online payment systems continues to be significant, particularly in enhancing the speed and convenience of the payment process for lower-value transactions, an area where cash still dominates," the article authors wrote.
"Contactless credit cards, in particular, are seeing strong growth in use, while Interac debit cards with the tap-and-go feature are at a relatively early stage of market development."
According to a 2013 method-of-payment survey, credit card use increased to nearly 31 per cent compared with just over 19 per cent in 2009.
Debit card usage slipped to 21 per cent from nearly 25 per cent.
Cash accounted for about 44 per cent of the transactions, down about 10 percentage points from a 2009 review.
The use of cash was lower in younger people, but all age groups surveyed saw their use of bills and coins slip below the 50 per cent mark in terms of the number of transactions they did.
However, cash has held its ground as a percentage of the total value of payments at about 23 per cent.
The report noted the total value of cash transactions worth more than $50 actually increased compared with 2009.
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Observers in the U.S. and elsewhere declared Canada a trailblazer when the Harper government announced in its 2012 budget this year that it's eliminating the penny. Canada isn't the first to do this -- Australia got rid of its penny decades ago, for instance, and various currencies around the world often eliminate their lowest denominations due to inflation. But the decision to kill the copper coin is nonetheless a sign that physical currency is less important to the economy than it used to be -- and central banks are beginning to notice the costs involved with it. Photo: Jeff Golby wears an oversized model of a pennyas he collects donations of pennies for local charities during Canada Day festivities in Vancouver, B.C., on Sunday July 1, 2012. (THE CANADIAN PRESS/Darryl Dyck)
Even our paper money is turning plastic. The Bank of Canada unveiled Canada's first plastic bill -- a new $100 -- last fall. The $50 bill went plastic this past March, and the $20 followed quickly in May. The plastic bills are meant to be more durable and include a variety of new security features, including a translucent strip. But they've already been through a few controversies: One involved the discovery that the new plastic bills may melt in heat; another involved a controversial decision by the BoC to eliminate an "Asian-looking" person from the original design of the $100 bill. Photo: Minister of Finance Jim Flaherty and Bank of Canada Governor Mark Carney show off the new $20 bank bill during a ceremony in Ottawa, ON Wednesday May 2, 2012. (THE CANADIAN PRESS/Adrian Wyld)
Perhaps the elimination of the penny made the Royal Canadian Mint realize that the age of physical coins may be coming to an end. The agency responsible for Canada's coins launched a new project this spring, called "MintChip," in which it's researching the creation of a "digital coin" shoppers could use for transactions under $10. On its face, the idea is similar to BitCoin, the virtual currency, but when a national mint develops something like this, it's a clear sign we're into a new era when it comes to money. Photo: The Canadian Press
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