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Cashless society: A consumer study of digital wallet usage in Canada

Published on 2023-08-02 by Tessa Anaya

Does the popularity of digital wallets indicate that Canada is moving towards a cashless society? We surveyed over 1,000 smartphone users in Canada to find out.

use of digital wallets lead to possible cashless society

Our own research shows that digital wallets have become hugely popular in Canada, especially since the start of the pandemic. Nearly half of smartphone users use them, another quarter are interested, and over 80% of users began doing so in the past three years.

Small to midsize enterprises (SMEs) should be aware of this trend. The growth of digital wallets is made possible by a string of technological developments and reflects changing attitudes to retail, payments, and data privacy. Even if you don’t use digital wallets in your business, knowing more about the topic will help you understand how customer expectations are changing.

In this second article on the subject, we help SMEs understand how people use their digital wallets when they shop and pay. We also take a closer look at the issues around data privacy when using digital payment methods, as well as people’s broader opinions on regulation of digital payments and the shift towards a cashless society.

You can scroll down to the bottom of this page for a full methodology.

Are digital wallets a mainstream payment method in 2023?

Digital wallet apps can be used at many retail stores, from small independent outlets to giant supermarkets. The infrastructure required is widely available to vendors, and most modern point-of-sale (POS) systems allow for contactless payment via either a bank card or a mobile device with a digital wallet app. All shoppers need to do is link this app to their credit or debit card.

Did you know? To accept digital wallet payments, SMEs will need an appropriate terminal that can accept mobile tap-and-go payments. Most modern terminals also accept contactless card payments as well. The vendors of these systems sometimes include payment processing software, but you may want to consider using a third-party product that links with your existing accounting software, for example.

People who use their digital wallets as a way to pay with their debit or credit card tend to see this as their default payment method. 87% said they have configured their main debit or credit card as a digital wallet, and the data suggests that they use this as their preferred payment method in a variety of scenarios. However,  it’s not quite the outright favourite way to pay —at least not yet.

frequency of digital wallet payments by users

With the exception of public transport, around one-quarter to one-third of users always use a digital wallet as their first choice of payment, with many more saying that they use it sometimes for grocery, retail, and drinking or dining out. The fact that fewer choose to use it for public transport may be because respondents to the survey don’t use public transport, or that the transport networks they use don’t yet accept contactless payment.

Key takeaway: As we explored in part 1, digital wallets are only growing in popularity. Their rise is important for retailers, but also for SMEs in hospitality, travel, food service, entertainment, and other sectors. If you don’t already take payment via digital wallets, you should investigate how you can do this as quickly as possible.

Digital wallets pose uncertainty about data privacy, but this has little impact on usage

Data privacy was a recurring theme throughout the survey. Four distinct user groups expressed some level of concern about this:

  • People who had no interest in digital wallets said the two main reasons for this were worries about data protection (60% agreed) and worries about losing sensitive information if their phone was stolen (58% agreed).
  • People who had stopped using digital wallets ranked the same concerns highly (albeit to a lesser degree).
  • 41% of people who were interested in digital wallets but hadn’t used them yet said that data protection concerns had put them off.
  • Loss or theft of a smartphone and the subsequent loss of sensitive information was the biggest disadvantage among digital wallet users, cited by 46%.

Those who use digital wallets to pay with their debit or credit card were also alive to the fact that their spending data was being collected. 15% said they were extremely concerned about this, and 46% were somewhat concerned. But of those who were concerned, a majority (54%) said that this didn’t affect how they use their digital wallets. 43% of them conceded that they only try to use the apps on certain occasions, and just 4% wanted to stop altogether. 

It seems that those who use digital wallets to pay are not altogether convinced about the level of protection they have through apps and how the app providers and government might act. Most (52%) said they were unsure whether the government is doing enough to regulate how information collected from digital wallets is stored and used —only 16% said it is. (That said, there are significant efforts underway to improve data protection law in Canada, with potential impacts for business on AI and security.)

Similarly, a plurality (42%) wasn’t sure whether the financial companies who offer digital payment methods are doing enough to protect digital payment information. But respondents were twice as likely to think that these companies were doing enough (32%) compared with the government.

Key takeaway: In general, smartphone users seem uncertain about data privacy when using digital wallets. They are aware of some of the general ideas —that companies could collect data about what they buy— but the implications don’t seem to have a significant impact on actual usage. There may be an opportunity here for SMEs to offer services (either technological or financial) with a clear differentiator of how data is used. This might involve a product that makes it clear how collected data will be used to provide benefits back to the consumer. Or it could be a product that offers enhanced privacy features.

How do Canadians feel about a cashless society?

One advantage of digital wallet apps is that they allow people to leave home with just one item in their pockets —their phone. Because the apps can store all the payment and card details they need, plus their car keys, they could be a major driver towards a supposed cashless society in the near future. Of course, this depends on how widely they are adopted and whether a sufficient infrastructure exists to support them.

Overall, people who pay using their credit/debit card via digital wallets believe that Canada is well set up for this. As we explored in part 1, the usage of digital wallets has increased substantially since 2020, and this wouldn’t have happened if they were not widely accepted by retailers. 52% somewhat agree that ‘there is a good infrastructure to use digital wallets in my country,’ while 36% strongly agree. 

However, these users don’t show an overwhelming enthusiasm to drop traditional payments just yet. While 61% said that they are willing to stop using cash and move to digital-only payments, a majority (58%) also say they always have some cash with them. This group is also split about the implementation of a society-wide cardless system. 49% would not be interested, while 51% would like to see it.

consumer opinion on cashless society

Canada isn’t cashless yet, but times are moving on

Canada may be a long way from a cashless society. Even those who have adopted digital wallets don’t see them as the only way to pay just yet. Depending on your business and how it operates, you may have little need to handle cash, but if you deal with the public, you should account for cash transactions while also encouraging digital payments.

Our survey revealed further concerns and uncertainty about the privacy and protection people get when using digital wallets. As we noted in part 1, there is an opportunity here for brands to demonstrate their credentials in this area to customers and potentially differentiate themselves from their competitors.

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GetApp’s data for this study was gathered through an online survey conducted in June 2023 in which we surveyed 1016 people residing in Canada from all regions in the country. The sample of participants is representative of the population of Canada regarding aspects of age and gender, and the criteria for selecting participants are as follows:

  • Over 18 years of age
  • Must own a smartphone
  • Must be able to correctly identify the definition of digital wallets after being provided one

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.

About the author

Tessa is a Content Analyst for GetApp, delivering software-related insights to local SMEs. She was featured in the Globe and Mail, La Presse, the Financial Post, and Yahoo.

Tessa is a Content Analyst for GetApp, delivering software-related insights to local SMEs. She was featured in the Globe and Mail, La Presse, the Financial Post, and Yahoo.