How to Pay in Canada: Cash, Cards, and More

Understanding Canada’s currency, payment methods, taxes, and gratuities is essential for smooth financial transactions. This guide offers practical insights for managing money effectively, whether visiting or moving to Canada.

Canadian Currency Basics

Canada’s official currency is the Canadian dollar (CAD), represented by the dollar sign ($). Banknotes are issued in denominations of $5, $10, $20, $50, and $100. These polymer banknotes feature prominent Canadian figures and distinct Canadian themes or landmarks.

Canadian coinage includes the 5-cent (nickel), 10-cent (dime), 25-cent (quarter), $1 (loonie), and $2 (toonie). The 1-cent penny was discontinued in 2012, so prices for cash transactions are now rounded to the nearest five cents.

Everyday Payment Options

Credit cards are widely accepted across Canada, with Visa, MasterCard, American Express, and Discover being common. Many transactions utilize chip-and-PIN technology, requiring a personal identification number (PIN) for verification, or tap-to-pay (contactless payment) for quick transactions, especially for amounts typically up to $250. Foreign transaction fees may apply when using credit cards from a non-Canadian bank, so it is advisable to check with your home bank regarding these charges.

Debit cards are also a prevalent payment method, primarily through the Interac network. Interac is Canada’s local debit network and is widely used for in-person transactions. While international debit cards, such as those on the Plus or Cirrus networks, might work, confirming compatibility with your bank before travel is recommended. Direct debit at the point of sale involves inserting or tapping your card and entering your PIN.

Although digital payments are common, cash remains useful in various situations. Smaller independent shops, street vendors, or certain farmers’ markets may prefer or only accept cash. Additionally, cash is often used for tipping in some service industries. Mobile payment options, including Apple Pay and Google Pay, are increasingly popular and function seamlessly with tap-to-pay terminals, allowing users to link their credit or debit cards for convenient transactions.

Taxes and Tipping

Understanding sales taxes is an important aspect of making purchases in Canada. There are three main types of sales taxes: the Goods and Services Tax (GST), the Harmonized Sales Tax (HST), and the Provincial Sales Tax (PST). The GST is a federal tax applied nationwide at 5% on most goods and services. The HST is a combined federal and provincial tax applied in some provinces, which integrates the GST with a provincial sales tax component.

Provinces that do not use HST typically have a separate PST, which is applied in addition to the federal GST. These sales taxes are generally added after the listed price of an item, meaning the price displayed on a shelf or menu does not include the tax. The specific tax rates and whether PST or HST applies vary by province, influencing the total cost of goods and services.

Tipping is a common practice in Canadian service industries. It is customary to tip restaurant servers, taxi drivers, hairdressers, and delivery service personnel. For restaurant service, a common guideline is to tip 15% to 20% of the total bill before taxes. In other service sectors, such as taxi services or hair salons, tipping typically ranges from 10% to 20%. Tips can be paid in cash or added to card payments, with many payment terminals offering the option to include a gratuity.

Managing Your Money

Accessing funds in Canada is straightforward, with Automated Teller Machines (ATMs) widely available. ATMs are found at banks, convenience stores, and shopping centers across the country. Most ATMs are compatible with major international networks like Plus and Cirrus, allowing for withdrawals using foreign debit or credit cards. It is important to be aware that ATM usage may incur fees from both the Canadian bank operating the ATM, typically ranging from CAD $3 to CAD $5 per transaction, and your home bank.

When withdrawing cash from an ATM, it is advisable to decline any offer for dynamic currency conversion and instead choose to be charged in Canadian dollars. This allows your home bank to handle the currency conversion, which often results in a more favorable exchange rate. For exchanging foreign currency into Canadian dollars, options include banks and dedicated currency exchange bureaus. While airports offer exchange services, their rates are often less favorable than those found elsewhere.