By Patrick Léonard

Technology exerts an oversized impact on our world, and in the last 20 years every sector has been disrupted. Processes that have been altered to embrace change now face a cycle of constant upheaval in an effort to keep pace with the latest tech trends, which are adopted quickly and abandoned just as fast as the newest apps and tech take hold.

Few industries have embraced these changes as quickly and successfully as the personal finance sector. Credit unions and their big banking competitors have collectively invested billions of dollars over the past two decades to take advantage of the process improvements and significant cost savings to be gained from the digital revolution.

But there have been casualties. And one of them is the almighty dollar.

Canadians are world-renowned for their willingness to adopt new technology, so much so that several of our major city centres have become hotbeds for innovation and technology.

And with the evolution of the financial technology (FinTech) sector, Canadians have proven themselves eager to tap, swipe or click their way through purchases.

Didn’t you know fishing for a bill in your pocket to pay for a pack of gum is just so…analogue?

That’s a compelling narrative for the progressive FinTech sector, but it’s far from the whole story. And the story of cash use in Canada is far from its final chapter.

Cash facts

According to a 2012 report from the Bank of Canada, The Changing Landscape for Retail Payments in Canada and the Implications for the Demand for Cash, cash accounted for more than 80 per cent of the volume and about half of the value of all point-of-sale (POS) transactions in Canada in the 1990s. In 2011, these shares dropped to below 50 per cent in volume and less than 20% in value.

By the time 2017 rolled around, cash use had stabilized. In the Bank of Canada’s August 2017 review, cash use rebounded back to 51 per cent of the volume of POS transactions. And while it still represented the smallest value share at 24 per cent of the value of all POS transactions, it was clear cash money had found its groove again. The data suggested consumers preferred to use cash for small-value transactions.

Compared with data from 2009, cash holdings on hand increased from an average $70 to $84. The measurement jumped again in 2017 to $105. These increases were focused around those with middle-class incomes and concentrated largely in the Atlantic region and Ontario, generally in the 55–75 age group1.

But that’s not all. Despite the number of withdrawals decreasing, the amount withdrawn remained relatively unchanged, while the average value of cash holdings increased. This indicates a reduction in the turnover of paper money, but by no means is it disappearing.

Dan Kelly, president and CEO of the Canadian Federation of Independent Business, agreed with this assessment.

“Cash is an important part of the Canadian retail service sector and I believe that will continue for a long time. As long as consumers choose to use it, merchants will be keen to accept it,” said Kelly. He added that many small businesses in the retail and hospitality sectors prefer it, “because it lowers their overall cost of payments, especially relative to credit cards.”

Kelly pointed out that many merchants among his organization’s membership prefer a cash sale. “They have the money in hand, they know the money is there and there’s the confidence and flexibility of having cash on hand,” he said. He added that cash lends confidence because it’s a secure transaction that ensures privacy and is relatively low cost when compared to other forms of payment.

“Of all the various form factors and flavours of payment that are out there, the merchant universe really follows the consumer in terms of payment method, rather than lead [the consumer],” said Kelly. “We are many years away from phasing out cash.”

Counting on cash

Its not just small business that keeps the cash flowing. There are some large international companies looking at cash money—moving it as well as counting it—as a growing segment in the services sector.

Based in Montreal, Que., GardaWorld is a privately-owned global security company that focuses on security services and cash solutions.

“As far as GardaWorld is concerned, it’s a growing business,“ said Stephane Gonthier, CEO of cash services at GardaWorld. “I actually see this business growing in the coming years at a double-digit annual growth rate.”

GardaWorld’s global cash services business processes about US$8 billion in cash each day, and has been on an acquisition and investment surge, buying up the cash processing operations of competitors and even some of the world’s biggest banks. In 2014, it signed a 12-year, US$1.4 billion deal to manage the cash and cheque processing for 32 of Bank of America’s locations in the U.S. The deal saw GardaWorld take on 1,000 Bank of America vault employees; it now runs more than 250 secure cash processing operations in North America2.

When a company of this size and stature is looking to significantly boost rather than reduce its exposure to cash, it’s a good sign that cash use will remain strong. But for Gonthier, there are other reasons he thinks cash will withstand the test of time.

“We must never forget that there are millions of Canadians that live from paycheck to paycheck and will likely never be able to get credit cards,” said Gonthier. “These people have little money in their bank account. Without cash you’re actually making life harder for lower-income Canadians.”

It’s not just the working poor or underprivileged who depend on the cash in their pocket for monthly budgeting. The wave of Millennials currently trying to enter the workforce by stringing together multiple temporary “gigs” have a similar need for cash on hand to keep their budget tight. Lastly, there are many communities of new Canadians who come from countries with cultural attachments to cash use. Members of these cultures eschew many of the high-tech POS choices and opt for cash transactions at every opportunity.

People in these circumstances exist in no small number. According to a 2016 report from ACORN Canada, a national advocacy group for low and moderate-income Canadians, about one million Canadians are “unbanked,” having no relationship with a mainstream financial institution such as a credit union or bank. On top of that, ACORN says 15 per cent—close to five million Canadians—are underbanked3. These people may have an account, but have a very limited relationship with mainstream financial institutions, making access to cash money a necessity of life.

For any credit union or big banking branch planning its cash management strategy for the next few years, it’s easy to see how the narrative of cash money being phased out can influence your planning. But considering all the segments of our population that depend on it, the small businesses that count on it, and the major corporations betting on it, expect cash money to remain in circulation for a long time to come.

Patrick Léonard is the General Manager for Cummins Allison Canada. Contact him at

1 Ben Fung, Kim P. Huynh and Gerald Stuber, “The Use of Cash in Canada”, Bank of Canada Review, spring 2015.

2 Nathalie de Champlain, “GardaWorld signs cash vault outsourcing partnership with one of the US’ leading banks”, press release, December 18, 2013.

3 ACORN Canada, “It’s Expensive to be Poor: How Canadian Banks Failing Low-income Communities”, backgrounder, May 2016.

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