Will Cash Soon Be a Thing of the Past?

Cash is gradually being replaced by electronic payment methods, mostly credit and debit cards. Although the phenomenon is as yet only marginal, a trend towards abandoning cash transactions is also under way in Canada’s retail trade. 

Despite the economic advantages of this transition for the State and for financial institutions, the direct benefits for merchants, and even more so for consumers, appear mixed, at best. The majority of merchants believe that the fees for accepting payment cards are too high and that the benefits they derive from refusing cash in their businesses do not outweigh the disadvantages. 

A cashless society would also risk excluding economically disadvantaged people: the biggest users of cash are low-income consumers, seniors, and those with lower levels of education. Also, unbanked and underbanked Canadians are particularly dependent on cash. 

The participants in the focus groups expressed the desire for cash to remain in circulation in Canada – even those who prefer electronic forms of payment. Control, freedom, anonymity, simplicity: cash has many benefits that payment cards can never truly replace. 

Consumers are upset when merchants refuse their money, even though they are resigned to accepting their policies. In short, consumers want to choose how they pay and feel it is illegitimate to have this democratic form of payment taken away from them. 

In Canada, monetary policy, including the power to invest a payment instrument with legal status, is a federal responsibility. However, the issues related to a merchant’s refusal to accept cash are intertwined with provincial contract law and federal regulations. 

In the common law provinces, the rights of each party vary depending on whether or not the creditor and the debtor concluded an agreement about payment methods. In Québec, discharge of payment methods is regulated by civil law; however, the scope of these provisions is unclear. 

This legal framework is complemented by an assortment of consumer protection provisions, which in some instances might apply to those who use cash. Other countries have recently passed laws or instituted public policy aimed at protecting cash users. These provisions, which oblige merchants to accept cash, could serve as inspiration for Canada. 

In conclusion, Option consommateurs recommends that the Currency Act be modernized in order to oblige merchants to accept cash offered by consumers and to set in place legislative measures aimed at harmonizing the regulatory framework for all electronic payment methods.