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Cash Is King but Retailers Are Missing the Boat

By admin

It might surprise you to learn that the bulk of transactions processed by Visa and Mastercard are not on their credit cards. Instead, it’s debit and prepaid cards that lead the way – and by a significant margin!


In 2021, 53% of all purchase volume was generated by debit and prepaid cards, whereas only 33% of transactions were from credit cards according to the February 2022 Nilson Report. 


If we dig deeper, the statistics paint an even clearer picture of why cash is king. Take a look at the Visa and Mastercard credit vs. debit/prepaid card circulation growth numbers in 2021: 


  • Debit/Prepaid cards in circulation grew by 18.8% to 1.09 billion – an increase of 173.1 million cards over 2020.

  • Credit cards grew by 8.5%, adding 50.3 million cards for a total of 642 million in circulation. 


It’s important to understand what these numbers mean to you as a retailer. It’s staggering to see that there are 70% more debit/prepaid cards in circulation, yet retailers remain focused on signing up consumers for private label credit cards (PLCC), while ignoring this this massive group of cash-only spenders. 


Again, a further look at the figures shows the lack of retail strategies targeting cash spenders doesn’t make financial sense, or cents.


Visa credit vs. debit card spending in 2021:

Credit cards accounted for $2.405 trillion in purchase volume. Debit/Prepaid accumulated $2.805 trillion. 


Mastercard credit vs. debit card spending in 2021: 

Credit cards made up $1.085 trillion, while debit/prepaid did $1.091 trillion in purchase volume. 


And if you thought this might be a one-off event, you’d be very wrong. Since 2001, Visa and Mastercard debit card purchase volume is up an astounding 1,265% and 1,775% respectively compared to 386% and 234% for their credit cards. 

The misperception of “buying power” is why retailers are still focused on credit cards

Until BNPL hit the scene, consumers who shopped with cash via debit cards simply had no access to credit card-style financing. Credit cards offered retailers the incentive of customers with “buying power.” The appeal of shoppers who can spend more than they can afford has lingered into today’s innovative financial landscape, causing retailers to largely ignore debit card spenders.

BNPL is a major innovation in consumer financing

Fact is, new credit card application rates are dropping as more Canadians opt to shop with cash. We can thank better financial education about budgeting and avoiding consumer debt for that. Also, according to, 15% of Canadians have a credit score between 520 and 680. A score below 650 makes it hard to qualify for new credit, and if approved, it will likely have high interest. 


BNPL gives cash spenders credit-card style financing by splitting purchases into four-equal payments, but more importantly, does it without interest. BNPL perfectly complements their spending style by providing financing without all the reasons they don’t want a credit card in the first place. 


Zip’s BNPL also doesn’t require a credit check and why 25% of consumers choose BNPL – it gives them more spending power without a traditional credit check. 

Not only does BNPL open you up to a largely underserved segment, you also get paid in full right away as Zip BNPL handles all of the repayment terms. Integration into your online and in-store checkout is seamless, and it doesn’t come with the cost of loyalty rewards, discounts and promotions to maintain a PLCC. And with 70% of Canadians paying off their credit cards in full each month and 78% selecting credit cards with rewards, the PLCC cost-benefit analysis doesn’t look too bright.  (Source: Canadian Bankers Association and Payments Canada)

Major institutions are investing billions in BNPL

This is the opportunity for Canadian retailers to catch the trend and not get caught chasing it. The numbers make it clear that a major shift in consumer financing is coming and why BNPL is making headlines more and more every day. 


If doubts still remain, then perhaps a look at spending by major institutions will change that. In 2021, the largest payment industry investment and acquisition was $37.14 billion for none other than BNPL. The next closest in the Nilson Report was for B2B Payments at $11.81 billion. Like they say, follow the big – and more importantly smart – money.

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Shira Schwartz assum legimus vis cu, mel et utamur aeterno oblique, cu pro tota sanctus persecuti. In saperet detraxit est, his eros tollit ne. Minim eripuit percipitur eos ad, wisi periculis nam in. Tota dicit per ne, dicat summo elaboraret ne duo. Mei scaevola principes no, ea vix inani oporteat