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Acceptance and Use of Payments at the Point of Sale in Canada

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Abstract

Merchants universally accept cash. Consumers widely hold cash but also carry debit and credit cards. The cost of using a method of payment has only a small influence on which method consumers use. Large merchants accept all payments, while only two-thirds of small and medium-sized businesses accept credit cards. Merchants report that credit cards are the costliest payment method compared with cash and debit cards. However, costs are not the only consideration. Merchant acceptance of credit accounts for the many con-sumers that want to use credit cards. This interaction between consumers and merchants is known as network externalities.

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  • Ben Fung & Kim Huynh & Anneke Kosse, 2017. "Acceptance and Use of Payments at the Point of Sale in Canada," Bank of Canada Review, Bank of Canada, vol. 2017(Autumn), pages 14-26.
    • Handle: RePEc:bca:bcarev:v:2017:y:2017:i:autumn17:p:14-26
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    Cited by:

    1. Walter Engert & Ben Fung & Scott Hendry, 2018. "Is a Cashless Society Problematic?," Discussion Papers 18-12, Bank of Canada.
    2. Marie-Hélène Felt & Fumiko Hayashi & Joanna Stavins & Angelika Welte, 2020. "Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in the United States and Canada," Working Papers 20-13, Federal Reserve Bank of Boston.
    3. Grodecka-Messi, Anna & Zhang, Xin, 2023. "Private bank money vs central bank money: A historical lesson for CBDC introduction," Journal of Economic Dynamics and Control, Elsevier, vol. 154(C).
    4. Marie-Hélène Felt & Fumiko Hayashi & Joanna Stavins & Angelika Welte, 2021. "Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States," Staff Working Papers 21-8, Bank of Canada.
    5. Ueda, Kozo, 2024. "Effects of bank branch/ATM consolidations on cash demand: Evidence from bank account transaction data in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 71(C).
    6. Kim Huynh & Gradon Nicholls & Mitchell Nicholson, 2019. "2018 Merchant Acceptance Survey," Staff Analytical Notes 2019-31, Bank of Canada.
    7. Geneviève Vallée, 2018. "How Long Does It Take You to Pay? A Duration Study of Canadian Retail Transaction Payment Times," Staff Working Papers 18-46, Bank of Canada.
    8. Walter Engert & Ben Fung & Björn Segendorf, 2019. "A Tale of Two Countries: Cash Demand in Canada and Sweden," Discussion Papers 2019-7, Bank of Canada.
    9. Arango-Arango, Carlos A. & Betancourt-García, Yanneth Rocío & Restrepo-Bernal, Manuela, 2022. "An application of the tourist test to Colombian merchants," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(4).
    10. Henry, Christopher S. & Huynh, Kim P. & Nicholls, Gradon, 2018. "Bitcoin awareness and usage in Canada," Journal of Digital Banking, Henry Stewart Publications, vol. 2(4), pages 311-337, May.
    11. Angelika Welte & Katrina Talavera & Liang Wang & Joy Wu, 2024. "Résultats de l’enquête de 2023 sur les modes de paiement acceptés par les commerçants : la pandémie de COVID 19 n’a pas fait disparaître l’argent comptant," Discussion Papers 2024-02fr, Bank of Canada.
    12. Walter Engert & Kim Huynh, 2022. "Cash, COVID-19 and the Prospects for a Canadian Digital Dollar," Discussion Papers 2022-17, Bank of Canada.
    13. Angelika Welte & Joy Wu, 2023. "The 2021–22 Merchant Acceptance Survey Pilot Study," Discussion Papers 2023-1, Bank of Canada.
    14. Fung, Ben & Huynh, Kim P. & Nield, Kerry & Welte, Angelika, 2018. "Merchant acceptance of cash and credit cards at the point of sale," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 12(2), pages 150-165, July.
    15. Christopher Henry & Kim Huynh & Gradon Nicholls, 2017. "Bitcoin Awareness and Usage in Canada," Staff Working Papers 17-56, Bank of Canada.
    16. Heng Chen & Matthew Strathearn & Marcel Voia, 2021. "Consumer Cash Withdrawal Behaviour: Branch Networks and Online Financial Innovation," Staff Working Papers 21-28, Bank of Canada.
    17. Felt, Marie-Hélène & Hayashi, Fumiko & Stavins, Joanna & Welte, Angelika, 2023. "Regressive effects of payment card pricing and merchant cost pass-through in the United States and Canada," Journal of Banking & Finance, Elsevier, vol. 154(C).
    18. Angelika Welte & Jozsef Molnar, 2021. "The market for acquiring card payments from small and medium-sized Canadian merchants," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(2), pages 87-97, April.

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