Australian businesses will be required to accept cash for essential items like groceries, fuel and medicine, under a proposed mandate by the federal government.
The move would bring Australia in line with several other economies that have already put in place cash mandates including Spain, France, Norway and Denmark. Cash mandates are also in place in some US states including Colorado, Illinois, Montana, Massachusetts, New Jersey and New York.
Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones outlined the planned mandate this week, stating that while people are increasingly using digital payment methods, there is an ongoing place for cash in our society.
“For many Australians, cash is more than a payment method, it’s a lifeline,” the joint statement said.
“Around 1.5 million Australians use cash to make more than 80% of their in person payments. Cash also provides an easily accessible back up to digital payments in times of natural disaster or digital outage.”
Treasury will commence consultation before the end of 2024 on which businesses supplying essential goods and services should be covered by the mandate.
The consultation will consider the needs of those who rely on cash, including people in regional areas and those unable to use digital payments, as well as the impact on businesses, particularly small businesses.
Ensuring accessibility
Dr Angel Zhong, Associate Professor of Finance at RMIT says the reforms will ensure accessibility for all Australians, particularly in rural and regional areas where digital connectivity might still be an issue, while allowing the system to continue to modernise.
“This proposal is part of a broader strategy to enhance Australia’s payment ecosystem. It complements other recent initiatives, like banning excessive debit card surcharges and the inquiry into the closure of regional bank branches and ATMs,” she said.
“It’s important to note that small businesses will be exempt from this mandate, in recognition of the operational challenges that cash handling can pose for smaller enterprises with limited resources. By targeting essential services and larger businesses, the policy focuses on areas where cash access is most critical without imposing undue burdens.
“As the payment system continues to evolve, it’s vital that innovation occurs at a pace that is both efficient and inclusive. While we embrace digital payment advancements, we must also ensure that no one is left behind.”
Jason Bryce, spokesperson for the Cash Welcome campaign, says the reforms are exactly what its petition – attracting over 190,000 signatures – has been calling for.
“The cashless society is dead in Australia, rest in peace,” he said.
“There will be more cash in circulation in the future, not less, because of mandated acceptance, and the huge market signal this sends – Australia will never ‘go cashless.”
Cheque phase out
The government has also released its Cheques Transition Plan, which will ensure the phase out of cheques in an orderly and planned way.
The usage of cheques has declined by 90 per cent in the last ten years and many banks and financial institutions are ending cheque issuance for new customers.
To manage this industry trend, the Government is acting to give customers and businesses the certainty and the assistance they need to switch to other payment methods.
Under the Plan, cheques will only stop being issued by 30 June 2028 and stop being accepted on 30 September 2029.