Canada Identified as Nearly Cashless, along with Belgium and France
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TORONTO, Sept. 23, 2013 /CNW/ - MasterCard (NYSE: MA) today unveiled a new global report "The Cashless Journey" that identifies Canada as one of the countries closest to being nearly cashless, along with Belgium and France, putting it among the most advanced countries in the world for cashless payments. Much of this success can be attributed to early adoption of payment innovations like PayPass Tap & Go™ technology, EMV Chip migration, a modern payments infrastructure, and the rapid emergence in Canada of NFC payment ready terminals.
The report, produced by MasterCard Advisors, tracks how 33 major economies are progressing from cash-based to cashless societies and identifies new technologies, government programs and consumer preferences as key factors that are driving this shift, creating more productive and inclusive economies.
"The increased adoption of electronic payments has propelled Canada to leapfrog other countries and secure a top spot as nearly cashless. In other words, Canadian's are comfortable with and prefer using other forms of payment and have been at it for years! What's interesting, though, is that the real and significant cost of cash for consumers and merchants is never discussed. Canadian businesses, government and consumers ultimately benefit from the safety, security and transparency of the innovative payment solutions that MasterCard develops every day," said Betty K. DeVita, President, MasterCard Canada.
Key findings of MasterCard's "Cashless Journey" report include
- Of the $63 trillion in total global consumer spend in 2011, 34 percent ($21 trillion) was done with cash, with cashless payments accounting for 66 percent ($42 trillion)
- Non-cash payments account for 90% of the total value of consumer payments in Canada
- Cash accounts for only around 10% of the total value of all consumer payments in Canada, and it only accounts for a little more than 40% of the number of transactions
- Countries including the United States (where an estimated 80% of the value of consumer spend was cashless), and Singapore (69%) are considered to be approaching a "tipping point" to becoming nearly cashless
- Emerging economies such as India (32%), Russia (31%) and Nigeria (10%) are just embarking on their cashless journey - in many cases they are shifting cash share at a faster pace than their more developed peers thanks to factors such as a growing middle class
A supplementary white paper also looked at the negative economic consequences of a cash-heavy economy and bad behaviours like corruption, and bribery. The study finds a tight correlation between cash and the ease of doing business in a country. The World Bank calculates its Ease of Doing Business scores as a product of several other measurements of business difficulty. These include factors such as how hard it is to start a business, access to credit, enforceability of contracts, and insolvency laws. The research showed clearly that:
- Countries where it is harder to do business appear also to be countries where consumers make more payments using cash.
- Credit and the ability to adjudicate credit are hurt in cash-intensive economies
- Cash-intensive economies are less productive per capita as cash is the only way corruption and bribery grow - impediments to business
- Cash and corruption go hand in hand. Research shows a strong link between the two as a preference for cash may be driven by a need for anonymity for payer and payee
- Countries with cash payments and larger gray markets do not appear to have larger average tax burdens than those with fewer cash payments and smaller gray markets
MasterCard Advisors' research indicates that how ready a country is to move from cash to cashless is determined by factors like the accessibility and affordability of financial services; the scale and market share of retailers; the level of technology that is available; and participation of consumers in the formal economy. However, in countries such as Germany (where an estimated 76% of the value of consumer spend was cashless), Japan (62%), Spain (54%) and Taiwan (43%), cultural behaviour appears to be keeping cash usage higher than market conditions would suggest.
The "Cashless Journey" report measures nations' progress towards more modern, efficient payment processes by looking at the current share of cash versus non-cash payments for consumers (Share), how this share has shifted in the past five years (Trajectory), and whether conditions exist for cash payments to move to electronic (Readiness).
The report measures three components of progress:
- Share: the percentage of the value of all consumer payments (including utility, government, medical, loan, P2P payments for goods or services as well as merchant payments at retail point of sale) that are presently done by a means other than cash
- Trajectory: a measure of the shift in cash share of consumer payments' value between 2006 and 2011
- Readiness: a measure of the future potential for conversion of cash payments to electronic payments
MasterCard NYSE: MA, www.mastercard.com, is a technology company in the global payments industry. We operate the world's fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard's products and solutions make everyday commerce activities - such as shopping, traveling, running a business and managing finances - easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews join the discussion on the Cashless Pioneers Blog and subscribe for the latest news on the Engagement Bureau.
About MasterCard Advisors
MasterCard Advisors, the professional services arm of MasterCard, provides clients around the world with insights and solutions that drive business impact and ROI. The company uses advanced analytics and deep payments expertise to translate data into actionable behavioral insights and customized services. With analyses based on more than 80 billion anonymous transactions processed in 210 countries worldwide, the company leverages aggregated information and a consultative approach to help financial institutions, merchants, media companies, governments and other organizations grow their businesses. For more information, go to www.mastercardadvisors.com.
SOURCE: MasterCard Canada
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