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More Canadian dollars in circulation than expected

Categories : Cash is trust
August 30, 2016
Tags : Alternative modes/methods of payment, Cash circulation policies, Retailers, Ubiquity
The amount of banknotes in circulation in Canada is surprisingly high compared to the number of transactions involving cash.
Communication Team / Equipo de Comunicación

According to the Bank of Canada, $80 billion banknotes were in circulation in 2015, representing an increase of $33 billion or 70% since 2004. The amount of cash in circulation has never been higher. However, cash transactions decreased from 7 to 5.5 billion over the same period.

President of Technology Strategies International Christie Christelis, who has been analyzing Canadian payment trends for the last 20 years, has no clear explanation for this difference, but assumed that people might hoard more money than before. Another hypothesis is that the gray market economy might be more significant than expected, skewing statistics.

Besides, new technologies such as contactless cards and mobile payments may also have overshadowed cash momentarily as they generated enthusiasm among consumers. For instance, Apple Pay allows its customers to install their credit or debit card in their phone and assigned each device a unique number which is forwarded to the merchant. The customer authenticates himself by scanning his fingerprint.

If these mobile apps might seem more convenient than cash at first sight, they are however not trouble free. Indeed, fingerprints cannot be read if the screen is dirty or the customer’s hands are damp and such mobile payments cannot be processed everywhere as about 50% of Canadian retailers are not equipped with the required wireless NFC technology yet.

To read the original article, click here.