Canada ‘sleepwalking’ into cashless society, consumer advocates warn

A consumer group is urgently calling on the federal government to follow other jurisdictions in the U.S and Europe and bring in legislation to stem the slide toward a cashless society.  

Only 10 per cent of transactions in Canada today are done using cash, according to Carlos Castiblanco, an economist with the group Option Consommateurs.

“There is a need to protect cash right now before more merchants start refusing [it],” Castiblanco recently told CBC Radio’s Ontario Today.

It’s critical to act now, he added, before retailers begin removing all the infrastructure required to store and maintain physical money.

“They are already used to dealing with cash,” he said. “So this is the moment to act, before it is more complicated.”

In a report called “Will cash be a thing of the past?”, Option Consommateurs published one of the first deep dives into who is still using coins and paper money.

‘Solid demand’ for cash

A recent online poll of some 1,500 people commissioned by a different group, Payments Canada, found that a majority of respondents were worried about the prospect of cashless stores and want to maintain the option to use cash — which is free from bank fees, isn’t susceptible to privacy breaches and can be used during internet outages. 

“There’s still very solid demand for cash,” said Sharon Kozicki, the deputy governor of the Bank of Canada, in a recent interview with CBC.

The bank closely tracks how money gets used, Kozicki said, with the use of cash actually rising at the beginning of the COVID-19 pandemic.

While that growth has slowed, Kozicki said there’s still an “overall general increase that suggests people still want it.”

Even a report commissioned by the Bank of Canada suggests it’s time to protect access to money. 

That report, titled “Social policy implications for a less-cash society,” recommends legislative action, arguing that cash-based transactions have plummeted from 54 per cent in 2009 to 10 per cent as of 2021. 

One of its authors, Aftab Ahmed, described who would be most affected by a world with no cash in a recent article of Policy Options, the online magazine for the Institute for Research on Public Policy.

“For many — such as Indigenous peoples, unhoused individuals, older Canadians, victims of domestic abuse and others who are vulnerable — cash is a beacon of economic security, a source of financial autonomy, an emergency lifeline and an emblem of cultural traditions,” Ahmed wrote.

“Canada must avoid sleepwalking into a cashless future and instead recognize the risk of exacerbating financial exclusion of those most vulnerable.”

Other cities, countries taking steps

The issue has caught fire outside Canada, Castiblanco said, with several jurisdictions beginning to legislate to protect access to cash. 

In 2019, Philadelphia became the first city in North America to prohibit “a person selling or offering for sale consumer goods or services at retail from refusing to accept cash as a form of payment.” 

Other U.S. cities like New York, Seattle and Los Angeles have since moved ahead on the issue. 

In New York, the regulation proposes fines of up to $1,500, with the councillor who sponsored the rules declaring that a ban on cashless businesses protects privacy, equity and consumer choice.

European countries like Norway, Spain, and Ireland have introduced similar laws. In Ireland, the law would require a cash option at businesses like pharmacies and grocery stores that sell essential products and services.

‘Tell MPs what you want’

Consumer groups in the United Kingdom like Payment Choice Alliance are pushing that country to follow Ireland’s model. 

“I think that we need urgent action now,” the alliance’s spokesperson, Ron Delnevo, told Ontario Today.

The group is calling for new rules in the U.K. by the end of 2025.

“We feel if it goes beyond that, there [will be] so many businesses not accepting cash,” Delnevo said. “Cash will be so difficult to access that the whole [cash-based system] will fall down.”

Delnevo said Canadians can take a lesson on the power of consumer action in his country. 

“MPs in our parliament have been inundated with mail from the public, and they are reacting to that,” he said. “So don’t let the politicians put their hands over their ears and not listen. Tell them what you want.”