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According to a Bank of Canada review, income has a big influence on the use of bank notes.Maciej Korzekwa/Getty Images/iStockphoto

The more cash you have, the less you spend it.

The Bank of Canada's spring review, released on Thursday, included a section on the use of cash in Canada, providing an interesting examination of how cash transactions have evolved with the growing popularity of credit cards, debit cards and, most recently, so-called contactless payments, which includes some payments made using smart phones.

According to the review, income has a big influence on the use of bank notes. That is, 52 per cent of purchases made by low income Canadians involve cash. That share falls to 45.2 per cent for medium incomes and 35.7 per cent for high incomes.

The share of cash purchases also falls with age: Younger Canadians use less cash than older Canadians. And it falls with education levels, too: The higher your degree, the less cash you spend. In all cases though, the use of cash is falling over time. Those who used cash cited cost and security as their main reasons.

"Cash is still mainly used for small-value transactions, but its share for such transactions is decreasing," the Bank of Canada researchers said.

They also compared our use of cash in 2013 (the most recent data) with 2009. Cash use in 2013 accounted for just 44 per cent of the number of transactions, down 10 percentage points since 2009. The value of payments held steady though.

"Debit card use decreased in terms of both volume and value," they said in their report. "In contrast, credit cards made significant inroads, particularly in their volume share, with an increase of 11 percentage points; a large part of this rise was due to the tripling of contactless credit card transactions. Stored-value cards also saw an increase in use."

Mobile payments – a big source of anxiety for Canada's banks as they face a potential competitive threat from the likes of Apple Inc. and its Apple Pay service – were used in just 7 per cent of purchases, though these are early days for this form of payment.

"Not surprisingly, the 18-34 year olds, those with higher incomes or university-educated respondents, had the highest rate for use of payment innovations," the researchers said.

The big banks might want to take note of another finding in the review. The use of automated banking machines (or ABMs) is declining as Canadians find they have less need to pad their wallets with physical cash.

According to the researchers, the number of cash withdrawals from ABMs fell from an average of 4.4 per month in 2009 to just 2.7 withdrawals per month in 2013 even as the amount withdrawn has held steady, at $118 per withdrawal.

In other words, if you think bank branches look outdated, perhaps the banks have other legacy costs that need addressing as well, as our use of cash continues to decline. As the researchers concluded, "Advances in technology and new business models may result in more payment innovations that could further affect the use of cash in Canada."