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Is the Modern Economy Heading Toward a Cashless and Checkless One? Evidence from the Payments System in Canada

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  • Weinian Liao
  • Jagdish Handa

Abstract

The recent innovations in the payments technology have resulted in considerable replacement of cash payments by non-cash ones, and of paper-based payment instruments by electronic ones. Do these innovations mean that the modern economy is heading toward one without currency and checks? This paper uses Canadian data from 1983 to 2001 to find answer to this question. It relies on Gompertz and logistic S-curve growth analyses to model the future replacement of cash payments by non-cash ones and of paper-based payment instruments by electronic ones and predict the saturation levels. Under current technology, while card payments will continue to further substitute for cash at the Point of Sale (POS), their share in total retail payments will saturate at around less than 40%. By comparison, the predicted satiation level for the replacement of checks by electronic payments is about 80%. Hence, under the current technologies, Canada will almost do away with checks, but will continue to use currency to a substantial extent.

Suggested Citation

  • Weinian Liao & Jagdish Handa, 2010. "Is the Modern Economy Heading Toward a Cashless and Checkless One? Evidence from the Payments System in Canada," The IUP Journal of Bank Management, IUP Publications, vol. 0(4), pages 48-70, November.
    • Handle: RePEc:icf:icfjbm:v:9:y:2010:i:4:p:48-70
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    Cited by:

    1. Jagdish Handa & Shubha Rahman Khan, 2008. "Financial development and economic growth: a symbiotic relationship," Applied Financial Economics, Taylor & Francis Journals, vol. 18(13), pages 1033-1049.
    2. Hock-Han Tee & Hway-Boon Ong, 2016. "Cashless payment and economic growth," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-9, December.
    3. Lukman O. Oyelami & Sulaimon O. Adebiyi & Babatunde S. Adekunle, 2020. "Electronic payment adoption and consumers’ spending growth: empirical evidence from Nigeria," Future Business Journal, Springer, vol. 6(1), pages 1-14, December.

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