September 23, 2013

New MasterCard study puts Canada among most advanced in the world for cashless payments

TORONTO — MasterCard has unveiled a new global report "The Cashless Journey" that identifies  Canada as one of the countries closest to being nearly cashless, along with  Belgium and France, putting it among the most advanced countries in the world for cashless payments. Much of this success can be attributed to early adoption of payment innovations like PayPass Tap & Go™ technology, EMV Chip migration, a modern payments infrastructure, and the rapid emergence in Canada of NFC payment ready terminals.

The report, produced by MasterCard Advisors, tracks how 33 major economies are progressing from cash-based to cashless societies and identifies new technologies, government programs and consumer preferences as key factors that are driving this shift, creating more productive and inclusive economies.

"The increased adoption of electronic payments has propelled  Canada to leapfrog other countries and secure a top spot as nearly cashless.  In other words, Canadian's are comfortable with and prefer using other forms of payment and have been at it for years! What's interesting, though, is that the real and significant cost of cash for consumers and merchants is never discussed.   Canadian businesses, government and consumers ultimately benefit from the safety, security and transparency of the innovative payment solutions that MasterCard develops every day," said Betty K. DeVita, President, MasterCard Canada.

Key findings of MasterCard's "Cashless Journey" report include

  • Of the $63 trillion in total global consumer spend in 2011, 34 percent ($21 trillion) was done with cash, with cashless payments accounting for 66 percent ($42 trillion)
  • Non-cash payments account for 90% of the total value of consumer payments in  Canada
  • Cash accounts for only around 10% of the total value of all consumer payments in  Canada, and it only accounts for a little more than 40% of the number of transactions
  • Countries including the United States (where an estimated 80% of the value of consumer spend was cashless), andSingapore (69%) are considered to be approaching a "tipping point" to becoming nearly cashless
  • Emerging economies such as  India (32%),  Russia (31%) and  Nigeria (10%) are just embarking on their cashless journey - in many cases they are shifting cash share at a faster pace than their more developed peers thanks to factors such as a growing middle class

A supplementary white paper also looked at the negative economic consequences of a cash-heavy economy and bad behaviours like corruption, and bribery. The study finds a tight correlation between cash and the ease of doing business in a country. The World Bank calculates its Ease of Doing Business scores as a product of several other measurements of business difficulty. These include factors such as how hard it is to start a business, access to credit, enforceability of contracts, and insolvency laws.  The research showed clearly that:

  • Countries where it is harder to do business appear also to be countries where consumers make more payments using cash.
  • Credit and the ability to adjudicate credit are hurt in cash-intensive economies
  • Cash-intensive economies are less productive per capita as cash is the only way corruption and bribery grow - impediments to business
  • Cash and corruption go hand in hand. Research shows a strong link between the two as a preference for cash may be driven by a need for anonymity for payer and payee
  • Countries with cash payments and larger gray markets do not appear to have larger average tax burdens than those with fewer cash payments and smaller gray markets

MasterCard Advisors' research indicates that how ready a country is to move from cash to cashless is determined by factors like the accessibility and affordability of financial services; the scale and market share of retailers; the level of technology that is available; and participation of consumers in the formal economy. However, in countries such asGermany (where an estimated 76% of the value of consumer spend was cashless),  Japan (62%),  Spain (54%) andTaiwan (43%), cultural behaviour appears to be keeping cash usage higher than market conditions would suggest.








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