If Clint Eastwood were Canadian, Sergio Leone’s classic would have been called A Fistful of Plastic. A recent MasterCard Advisors white paper suggests that non-cash instruments account for 90% of payments in this country, among the highest rates in the world:
And the credit card companies are coming for that last wad of cash: The Global Journey from Cash to Cashless gives Canada a table-topping readiness score of 91, indicating macroeconomic factors pushing consumers away from physical money.
That doesn’t mean Canadians have stopped carrying notes and coins, however. Cash still accounts for over 40% of all transactions, but the small dollar-value of most purchases skews the value scale.
Of course, cashless payments aren’t restricted to credit cards, and the “other” section of the adjacent graph looks set to grow as more and more businesses and retailers add mobile-friendly payment options. Mobile wallets will take a good chunk of consumer transactions too.
Wireless cash isn’t just the preserve of the rich world—a quarter of Kenya’s GDP flows through mobile payment system M-Pesa, and David Wolman’s book The End of Money: Counterfeiters, Preachers, Techies, Dreamers—and the Coming Cashless Society argues it could make welfare more efficient:
The more progressive line argues, as Wolman does, that reliance on cash transactions “perpetuates [poor] peoples’ exclusion from banking and the formal economy” and makes it hard for governments, especially in developing countries, to efficiently serve their citizens. Wolman cites a recent McKinsey study that found that if the Indian government could find a way to make all its payments to its citizens electronically, it could save more than US$22 billion a year—equivalent to 20% of the national deficit, or enough money to fund India’s major food aid program for two years.
Nobody really mourned the death of the penny, and it seems that other forms of cash could be set to meet the same fate.