Cash payments in Canada declined 40% in volume over the last five years, according to a recent report from Payments Canada, an organization that operates a payment clearing and settlement system in the country. 

According to the report, Canadians are rapidly adopting newer digital channels, such as contactless, e-commerce, mobile and online transfers, in favor of cash.

The newly released 2019 report analyzed the 21.1 billion payment transactions made in the country in 2018, totaling more than C$9.9 trillion ($7.5 trillion) in value.  

Electronic payments accounted for 73% of total payments volume and 59% of total payments value. The report also revealed that contactless payments grew 30% year-over-year in 2018 with a total of 4.1 billion contactless payments (card and mobile) worth C$129.9 billion at point-of-sale.

Debit, often viewed as a convenient substitute for cash, represented almost 60% of volume of these contactless payments. In fact, debit card use overtook cash for the first time in recent years, the report said. 

Meanwhile, credit card use has accelerated dramatically with a 52% increase in transaction volume over the last five years. Canada currently ranks second with highest volume use of credit cards per capita in the world after South Korea, according to the research.

Credit cards are now on par with debit cards as share of overall payments volumes, at 29% and 28% respectively in 2018, the report said. 

"There has been a remarkable transition from paper-based to digital payments over the last five years, but there is still a huge opportunity and need to advance Canada's payments landscape," Cyrielle Chiron, head of research and strategic foresight at Payments Canada, said in a statement. 

Payments Canada is responsible for ensuring that financial transactions in Canada are carried out securely each day. It complied the report by collaborating with payment service providers, payment consults and researchers to form the understanding of the payment landscape in 2018.