The rapid roll out of contactless credit cards and NFC-enabled mobile payments in Canada will challenge cash’s dominance by 2016, according to Research and Markets’ new report, “Canadian Payments Forecast – 2012.”

According to the report, contactless payments are likely to account for “significant” transaction volumes and values by 2016, with mobile payments following close behind. By 2016 almost 80% of the smart phones in Canada will be NFC-enabled, providing a solid foundation for the uptake of mobile contactless payments.

R&M attributes the projected growth to increasing personal expenditure on consumer goods and services, and the increasing penetration of electronic payments into strongholds previously reserved for cash and checks.

Cash is still expected to remain the most frequently used form of payment in Canada over the next five years, but will suffer substantial erosion from contactless debit and credit payments, according to the report.

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