A recent study by Payments Canada has revealed a surprising twist in the ecosystem of payment security: Canadians are nearly three times more likely to encounter fraud when using cash compared to credit cards.
This finding challenges the widespread perception that cash is the safest payment method, with 72% of Canadians viewing it as secure.
Conducted earlier this year, the research study surveyed 1,500 Canadians and uncovered critical insights into the evolving landscape of payment fraud, highlighting the need for heightened vigilance and better fraud prevention strategies.
The research found that 13% of Canadians experienced payment fraud over a six-month period in 2025, a figure consistent with previous years.
However, the types of fraud and their impact vary significantly across payment methods and demographics.
Cash transactions led to the highest fraud incidents, with an average of 22.4 fraud experiences per user over the six months, compared to 8.8 for both credit and debit cards.
Prepaid cards followed at 10.5 incidents.
Common cash-related frauds include counterfeiting, pickpocketing, and scams like romance or advance-fee frauds, which exploit the untraceable nature of cash.
Jon Purther, Director of Research at Payments Canada, noted that the longevity of cash may allow fraudsters to refine tactics over time, making it a prime target.
Newcomers to Canada face a disproportionately high fraud risk, with 25% reporting incidents—nearly double the national average.
Younger Canadians (18-34) are also more vulnerable, with 58% of fraud victims in this age group experiencing an incident in the past month, compared to 32% of middle-aged (35-54) and 24% of older Canadians (55+).
This disparity may stem from younger individuals’ frequent use of digital platforms like social media for payments, which exposes them to scams such as impersonation fraud.
Despite these risks, 53% of Canadians say fraud concerns influence their payment preferences, with many opting for trusted e-commerce sites or local, in-person transactions to mitigate risks.
Financial losses from fraud were typically modest, with 60% of victims losing money, mostly under $500. Encouragingly, 65% of these losses were fully reimbursed by financial institutions, and 21% were partially covered.
Older Canadians were more likely to avoid monetary loss, with 60% reporting only stolen personal data compared to 34% of middle-aged and 23% of younger Canadians.
However, 37% of fraud incidents involved stolen financial data without immediate financial loss, underscoring the long-term risks of identity theft.
Despite cash’s vulnerability, it remains a popular payment method, with 49% of Canadians using it frequently in 2023, according to Payments Canada’s Canadian Payment Methods and Trends Report.
Its perceived safety, ease of use, and wide acceptance drive its appeal, even as digital payments dominate 86% of transactions.
Credit and debit cards account for 63% of payment volume, while online transfers like Interac e-Transfer are growing, surpassing cheques in business transactions.
The study also highlights gaps in fraud prevention.
While 78% of Canadians limit personal information shared online and 67% use two-step authentication, 19% still use the same password across accounts, and 6% have shared banking details via email or text.
These habits, particularly among younger Canadians, increase vulnerability. Payments Canada is addressing these challenges through initiatives like the Canadian anti-scam alliance and a centralized fraud system for the forthcoming Real-Time Rail payment system, set to launch soon.
As fraud tactics evolve, the Payments Canada study serves as a wake-up call. Cash, often seen as a safe haven, is a significant fraud risk, particularly for newcomers and younger Canadians.
Consumers must stay vigilant, adopt stronger security practices, and leverage the protections offered by financial institutions to navigate the increasingly complex payment space.
