Hamilton leads Canada in cashless businesses, company analysis finds
Bates and Green Garage auto shop has seen three major changes since a duo of World War Two veterans opened it in 1946.
The first was a change to its current Carlisle location in 1954, the second was a change in ownership about sixty years after that, and the third was the pandemic, which spurred its first-ever shift to cashless transactions.
Co-owner Rebecca Lamb said the decision was intended to accommodate restrictions on in-person service throughout the pandemic.
Hamilton appears to be leading the charge on having the most cashless businesses" in Canada at 42 per cent, according to a recent analysis of client data from Square, a point-of-sale technology company based in San Francisco.
For some local small business owners, the pandemic pushed them to offer digital transactions, almost exclusively, to promote contact-free service.
The e-transfer is great, but some people would just come with cash," for a minor job like a tire repair, said Lamb. She said her customers at the auto shop have been understanding, but she hopes to resume accepting cash in the future, in part to offset credit card transaction fees of 1.69 to 2.67 per cent for Mastercard, and 1.38 to 2.53 per cent for Visa.
The fees are killing us ... It's just ridiculous."
At the start of the pandemic, the unknown health and safety risks related to cash transactions - especially at a time when the public was cautioned about surface contact - caused consumers to be acclimated to e-transactions. This pandemic outcome drove the trend to going cashless, said Felipe Chacon, an economist at Square.
Rather than seeing a complete rebound ... most of the movement that we've seen in the past year - away from cash and towards digitization - has stuck with us and we don't see evidence of it waning."
Square based its analysis on data from its clients, and defined cashless" as those businesses that counted in-person credit or debit, online, and contactless payments as more than 95 per cent of transactions.
The report analyzed millions of transactions between the beginning of January 2020 to the end of February 2021. The data showed four in 10 Hamilton businesses no longer accepted cash, the highest in the country, and that eight in 10 businesses now have an e-commerce presence or sell online - one per cent behind Saskatoon.
When it comes to sector-specific trends across Canada, Checon said businesses like salons are seeing a notable shift to contactless where the industry was more resistant to that prior to COVID-19. The food, drink and retail industries in Canada went up to about 20.8 per cent cashless from five per cent, according to Square's analysis.
Poverty advocates say the cashless trend is leaving behind vulnerable populations who cannot afford to create a bank account or qualify to sign up for a credit card, or don't have access to technology.
That's a big challenge for lower-income people in Hamilton because they can't get access to the credit card or perhaps it's maxed out and they don't have access to other credit," said Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction. That's a growing trend that we're seeing, and it's creating a real sense of inequality."
He said most social assistance recipients are paid through a transfer into their bank account, but there is a segment who still receive mailed checks, and those who access the funds through alternative outlets such as payday loans.
Lt.-Col. John Murray, communications secretary at the Salvation Army, said finding solutions to this issue cannot be driven by solely by the business community. Last summer, the organization called the ministers of finance, social development, and trade to consider how a cashless or cash-lite society would affect vulnerable, marginalized, and new Canadians.
When you're living on the streets, or you're living in a shelter ... that's just one more huge stressor, where cash transactions, I think, for many are a very practical and simple way to manage their lives," Murray said.
Square - founded by Twitter's Jack Dorsey - charges 2.65 per cent for credit cards used at its terminal and a 10-cent flat fee for debit. Payments made online or keyed into the terminal have higher transaction and flat fees.
Still, for Liana Valentini, co-founder of Hamilton Meat Pie Co., which uses Square, the fees of going cashless work do not outweigh the cost-saving benefits of it when she considers the time spent to count and balance the tills daily and make frequent trips to the bank.
It was something we had thought about, and the pandemic just catapulted us in that direction," she said.
Vjosa Isai is a reporter at The Spectator covering Hamilton-based business. Reach her via email: visai@thespec.com.