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What are Different Forms of Payment?

Will that be cash or credit? Typically when we step up to the front of a cash register, we are asked how we would like to pay for our purchases. Previously, many people would answer that question with cash, but these days, various other payment forms have taken the front seat of our wallets in 2020.

Now more than ever, individuals have numerous payment options available to us. So what are the different pay methods that small businesses should consider accepting, and which ones are the most popular for Canadians to use?

These topics will help you understand more about accepting payments and it’s role in small business management: 

What are the Most Used Payment Methods?

In recent years, electronic payments seem to be the frontrunner for Canadians as the most popular transaction methods. Using information gathered from the point-of-sale environment across Canada, including physical and virtual payee locations, the 2019 Canadian Payment Methods and Trends (CPMT) Report illustrates that individuals are shifting towards more digital-friendly payment methods as it offers users quick and convenient processing on the go, and online.

Business owners will need to consider these trends when deciding on the payment processing methods that will work for them. Let’s take a look at the five most common forms of payment that we will discuss in more details.

  • Cash
  • Debit card
  • Credit card
  • Online payments and electronic transfers
  • Cheques


Where once cash reigned supreme, these days, card and electronic payments are gaining ground for the most used monetary forms of the twenty-first century. The 2019 CPMT Report displays a 40% decline in cash usage across Canada in the last five years. Even though cash as a payment form made up 21% of the overall volume of payments in 2018 across Canada, it only represented 1% of the total value.

However, much cash transactions offer the most cost-effective types of payment, with zero fees attached for small businesses. The use of paper money is further falling by the wayside as the world adapts to COVID. There is currently a shift in cash payments across the globe, as many businesses are stressing the use of contactless options due to the ongoing pandemic.

Debit Card Payment

2016 was the first year that debit card transactions overtook cash payments, and the gap has only continued to widen. In 2018 Canada completed over six billion debit card transactions illustrating just how popular this method is across the country.

Contactless payments can be made with debit cards, which have been steadily on the rise. Debit contactless made up almost 60% of the contactless transactions across Canada in 2019, but only 35% of the total value. This means that many people might look to debit cards for small contactless payments, and credit cards for the larger valued transactions.

Credit Card Payments

By 2018, credit card payments shared the highest overall payment volume alongside debit card transactions. Together, the two card transaction types took up the highest percentage of payment volume and value across Canada at 29%, respectively, in 2018.

By the end of 2019, Canada ranked second in the world for the highest volume use of credit cards per capita, just behind South Korea, with nearly 9 out of 10 Canadians possessing a credit card. The uptick in credit card usage is fueled by the expansion of e-commerce across the country, as well as the growing incentive surrounding credit card rewards.

Contactless payments have grown in use since 2017 by over 30% – and now we will most likely continue to see a considerable spike in contactless card payments as the pandemic continues to affect our purchase methods.

Learn more about dealing with credit card payments for your small business.

Online Payments and Electronic Transfers

Online payments and electronic transfers are on the rise over the last five years. The CPMT Report asserts that Electronic Funds Transfer (EFT) is the number one payment method for businesses in 2019, and will only continue to grow in popularity. EFT transactions include direct deposit, bank transfers, pre-authorized payments, and online bill payments.

In 2019 Canadian businesses sent over $465 million via Interac e-transfer bulk disbursement. This e-commerce option is the most widely used form of online transfers in the country, particularly for peer to peer, or P2P, payments. In 2018, Canada saw a 52% increase in the volume of online transfer transactions.

EFTs are also widely used by both small and medium businesses, as well as corporations, to pay their payroll, taxes, and utilities and professional services. To facilitate transfers, most people turn to their mobile devices as the channel for online and electronic payment.

E-commerce payment methods are dominating the market and should therefore be considered by your small business for paying your expenses or even receiving money from suppliers or customers. Interac payments offer a quick and easy transaction process, with the money being deposited directly into your account within a day.

How do I receive Interac e-transfer?

Consider accepting e-transfers as a form of payment for your business- whether from customers, or other revenue-generating services. Your online and mobile banking apps should always show the option for these e-transfers in their dashboards. To receive Interac e-transfers, you can edit your settings in your online banking to accept them freely, or add a password for protected transactions.


In the last five years, Canada has seen an overall drop of 29% in the usage of paper cheques, but that does'nt mean that cheques as a payment method are on the way out of the economy.

In 2018 cheques in paper format made up only 3% of the total payment volume across the country but represent 39% of the total transaction value. Small and medium businesses and corporations often used cheques to pay for their rent, professional services, and government taxes.

Cheques are still in use today, but their format has seen a shift. In the last two years, individuals and businesses have migrated their paper cheques into electronic cheques. Over 70% of cheques used today are exchanged electronically as images.

With paper cheques on the decline, consider using electronic cheques to pay for your business expenses. There are also various benefits of accepting electronic cheques over paper for your business and its customers.

How long are cheques good for?

In Canada, banks are required by law to accept cheques up to six months after their issue. A cheque is considered stale-dated six months after it has been issued. After six months, a cheque can still be regarded as valid, but it is up to the financial institution’s discretion if they will honour it or not.

Payment Fees to Watch Out For

Many of the payment forms discussed above will have specific fees attached to them that you must consider before using the methods in question.

Cash is one of the only payment options that will not produce transaction fees for you and your business. To accept credit cards and debit cards, your business will need to pay a certain amount in fees per transaction, every month. But with how popular the use of these cards has become, offering this payment type at your business is still a good idea.

Interac payments and electronic transfers may be free for a certain number of transactions within any given month, however, the bank typically caps that number before fees or charges are added on. You will need to check your bank accounts to see what exactly that number is, and whether or not they can be waived by other measures of usage on your account.

The Future of Payment Methods

The evolution of the digital payment landscape has taken a decade to really get going. Now, with the exponential growth of technology, the various payment methods could be changing even faster. So what could the future of payment methods look like?

One thing is for sure, mobile payments and virtual wallets are the next substantial move towards e-commerce and digitizing transactions. Mobile apps such as Apple Pay, Google Pay, and Samsung Pay, are all on the rise as people look towards their smartphones and mobile devices for convenience and efficiency in their every day lives.

The apps require a quick connection to your bank account information, and then you’ll be able to use your phone to purchase things in-store and online.

Why Payment Methods Matter to your Small Business

As businesses across the country continue to look for digital solutions for easy and efficient payment processing, e-commerce payment methods are on the rise, and will only continue to grow in popularity.

The value that modern transaction methods can bring to your business is immense. With the world continuously looking to improve current technology, the shifts in payment forms and uses must continue to be monitored to take advantage of the changing landscape.

One of the ways businesses can do this is by using accounting software that can accept all types of payments and transactions.

QuickBooks Online offers small businesses the ability to receive various payment methods, whether through the software or with a seamless connection to mobile payment apps. No matter what industry you’re in, you’ll want to provide your customers with the most popular payment options that work best for them.

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