Payment Methods

Square On Canadian Merchants And Cash(less) Payments

Today’s average Canadian consumer is more cash-enthused than their average American counterpart.

Canadians still make about 51 percent of their purchases in cash, according to data from the Bank of Canada – as opposed to Americans, who handle less than a third of their transactions in cash, according to the PYMNTS Global Cash Index. Canadians, by the numbers, are also somewhat more likely to be carrying cash – 87 percent report having it in their wallet every time they go out, compared to the approximately 50 percent of Americans who report carrying physical cash on them less than 50 percent of the time.

Looking at the PYMNTS and Bank of Canada figures, the user patterns between the two nations are similar. Both groups, for example, prefer cash for smaller value transactions, with a greater preference for card-based buys for larger purchases – though Canadians do seem to be particularly averse to using cards for transactions of a low dollar value ($2 to $5).

But as  Square Canada, told PYMNTS, the most interesting thing about Canada isn’t how it seems to be stuck in a more cash-based past, but how it seems to be sprinting toward a more digital payments-enabled future.

This past October 2017 marked Square’s fifth year in Canada, and over the last five years they say they have seen a great response from sellers. Hundreds of thousands of individuals and businesses across every province and territory in Canada have accepted payments using Square.

Catching up to Consumers

The Canadian consumer is changing, particularly in their payments habits. According to a recently released study by Square, 79 percent of Canadians are identifying as card-first buyers on all but the smallest purchases, and three quarters are carrying less cash today than they have historically.

That figure is still roughly $50 – but it’s $50 that’s spending a lot more time in the Canadian consumer’s wallet (about 17 days, on average) before it’s all spent.

The older conventional wisdom, tends to see Canada as essentially more cash-locked than the U.S. – but in looking at the data they gathered, it became clear that the consumer is readier to go than most local businesses appreciate.

“This study was prompted by a desire to further understand if small businesses are keeping up with consumers’ payment preferences,” according to Square “A key takeaway for us is that Canadian businesses need to rethink how they let buyers pay, as there is a significant cost to not accepting cards.”

The goal for Square, , is to help businesses bring in more customers. And Canadian customers are increasingly attracted to a digital payment method – nearly 70 percent said they would be more likely to visit and shop at a business that accepts cards.

The problem in Canada is that merchants don’t seem to know that: 85 percent of those who only take cash (or checks, in some cases) report that their lack of card services isn’t costing them sales.

Buyers’ attitudes, according to Square  toward payments have changed, and so too should local businesses – the data indicates that 41 percent prefer to only pay by card.

Getting Business to the Next Phase

Helping businesses avoid unnecessarily missing those sales will require some effort. The first strategy, and the one in which Square specializes is to offer them a fairly easy, inexpensive and straightforward way to jump into the digital economy. Easy equipment, easy set-up – “up and running in five minutes” – is the easy part for Square, as the company continues in its quest to help get Canada on the digital fast track.

The harder part, of course, is influencing the minds of merchants – particularly smaller ones – and convincing them that adding card functionality is not a horrible imposition, but will be a positive boon for their business, and a lot less expensive than missing a sale. Of the merchants surveyed for Square report, a full 40 percent reported not ever really considering whether offering a more diverse set of payment options, other than cash or check, might be important to their customers.

Getting the issue to top of mind for merchants is an ongoing educational effort, but one well worth making, because the data doesn’t lie – and it indicates that those payment options are important to today’s consumers today, and getting even more important at time goes on.

“To remain competitive, no business, large or small, can afford to miss out on sales,” Cathy Vigrass, head of Square Canada noted.

And if there is one thing we know, it’s that merchants always accept a method of payment that enough consumers consistently like to use.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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