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The Changing Landscape for Retail Payments in Canada and the Implications for the Demand for Cash

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Abstract

Over the past 20 years, there has been a major shift away from the use of paper-based retail payment instruments, such as cash and cheques, toward electronic means of payment, such as debit cards and credit cards. Recent Bank of Canada research on consumers’ choice of payment instruments indicates that cash is frequently used for transactions with low values because of its speed, ease of use and wide acceptance, while debit and credit cards are more commonly used for transactions with higher values because of perceived attributes such as safety and record keeping. While innovations in retail payments currently being introduced into the Canadian marketplace could lead to a further reduction in the use of cash over the longer term, the implications for the use of cash of some of the structural and regulatory developments under way are less clear.

Suggested Citation

  • Carlos Arango & Kim Huynh & Ben Fung & Gerald Stuber, 2012. "The Changing Landscape for Retail Payments in Canada and the Implications for the Demand for Cash," Bank of Canada Review, Bank of Canada, vol. 2012(Autumn), pages 31-40.
  • Handle: RePEc:bca:bcarev:v:2012:y:2012:i:autumn12:p:31-40
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    Citations

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    Cited by:

    1. Janet Hua Jiang & Enchuan Shao, 2014. "Understanding the Cash Demand Puzzle," Staff Working Papers 14-22, Bank of Canada.
    2. Van Hove, Leo, 2015. "Modelling banknote printing costs: of cohorts, generations, and note-years," Economic Modelling, Elsevier, vol. 46(C), pages 238-249.
    3. Heng Chen & Marie-Hélène Felt & Kim Huynh, 2014. "Retail Payment Innovations and Cash Usage: Accounting for Attrition Using Refreshment Samples," Staff Working Papers 14-27, Bank of Canada.
    4. Ben Fung & Miguel Molico & Gerald Stuber, 2014. "Electronic Money and Payments: Recent Developments and Issues," Discussion Papers 14-2, Bank of Canada.
    5. Fujiki, Hiroshi & Tanaka, Migiwa, 2017. "Choice of payment instrument for low-value transactions in Japan," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162909, Deutsche Bundesbank, Frankfurt am Main.
    6. Christopher Henry & Kim Huynh & Rallye Shen, 2015. "2013 Methods-of-Payment Survey Results," Discussion Papers 15-4, Bank of Canada.
    7. David Bounie & Abel François & Leo Van Hove, 2017. "Consumer Payment Preferences, Network Externalities, and Merchant Card Acceptance: An Empirical Investigation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(3), pages 257-290, November.
    8. Christopher S. Henry & Kim P. Huynh & Gradon Nicholls, 2017. "Bitcoin Awareness and Usage in Canada," Staff Working Papers 17-56, Bank of Canada.
    9. repec:bla:jorssa:v:180:y:2017:i:2:p:503-530 is not listed on IDEAS
    10. Anneke Kosse & Heng Chen & Marie-Hélène Felt & Valéry Dongmo Jiongo & Kerry Nield & Angelika Welte, 2017. "The Costs of Point-of-Sale Payments in Canada," Discussion Papers 17-4, Bank of Canada.
    11. Héctor Pérez Saiz & Gabriel Xerri, 2016. "Credit Risk and Collateral Demand in a Retail Payment System," Discussion Papers 16-16, Bank of Canada.
    12. Walter Engert & Ben Fung, 2017. "Central Bank Digital Currency: Motivations and Implications," Discussion Papers 17-16, Bank of Canada.
    13. Galbraith, John W. & Tkacz, Greg, 2015. "Nowcasting GDP with electronic payments data," Statistics Paper Series 10, European Central Bank.
    14. Mati Dubrovinsky, 2014. "A Speedier and More Efficient Payments System for Canada," e-briefs 190, C.D. Howe Institute.

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