Lexi Webster
Australia is experiencing a significant shift in the way consumers and businesses make and accept payments. The use of cash is declining, with ATM withdrawals decreasing by 20% between August 2020 and August 2021. This trend is accelerated by the COVID-19 pandemic, as consumers and businesses opt for contactless and digital payment methods to minimise contact and prevent the spread of the virus. While Australian law dictates that legal tender is a form of money that must be accepted in the country, businesses are not legally required to accept cash payments. This has raised questions about the implications for individuals and businesses regarding cash transactions, particularly in a rapidly evolving payment landscape.
| Characteristics | Values |
|---|---|
| Legality of having cash at home | Not illegal |
| Legality of businesses refusing cash payments | Legal, but must provide adequate notice |
| Restrictions on cash payments | Businesses must report cash payments of AUD 10,000 or more under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 |
| Trends in cash usage | Declining due to the rise of digital and contactless payments, and the impact of the COVID-19 pandemic |
| Predictions for a cashless society | By 2025, cash may represent only 2% of point-of-sale transactions; the Commonwealth Bank of Australia predicts Australia will be cashless by 2026 |
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What You'll Learn
Businesses can refuse cash payments
There is no law against a business refusing to accept cash for goods and services in Australia. Businesses are within their rights to set the commercial terms upon which payment will take place before the "contract" for the supply of goods or services is entered into. However, businesses must keep in mind that they may be required to provide adequate notice to potential clients that they have decided not to accept cash payments.
The legality of refusing cash payments is a nuanced issue for Australian businesses. On the one hand, businesses might want to refuse cash payments to streamline their operations and reduce costs associated with handling, counting, and banking cash. Additionally, during the COVID-19 pandemic, many businesses refused cash payments to maintain hygiene and minimise contact.
On the other hand, some Australians may not want or be able to afford to phase out cash, especially among groups with low digital literacy or those without stable internet access. For instance, Federal Member for Kennedy, Bob Katter, made headlines when he was unable to pay for his lunch with a $50 note because the Parliament House cafe no longer accepted cash. Katter stated that businesses have to accept legal tender under the law and that it was embarrassing that they refused to do so in the place where laws are made.
In conclusion, while businesses in Australia can refuse cash payments, they should consider their customer base and local regulations before making this decision.
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Coins as legal tender
In Australia, coins are a legal tender if they are Australian coins. However, there are restrictions on how much can be paid in coins. According to the Currency Act 1965, the legal amount that can be paid in coins is limited as follows:
- Not exceeding 20 cents if 1-cent or 2-cent coins are offered (these coins are no longer in circulation but are still legal tender).
- Not exceeding $5 if any combination of 5-cent, 10-cent, 20-cent, and 50-cent coins are offered.
- Not exceeding 10 times the face value of the coin if $1 or $2 coins are offered.
For instance, if an individual wants to pay a merchant with 5-cent coins, they can only pay up to $5 worth of 5-cent coins, and anything above that will not be considered legal tender. It is important to note that the provider of goods or services can set the commercial terms of payment before the contract for the supply of goods or services is agreed upon.
In addition, commemorative coins or transfer bills that are not intended for public circulation may still be considered legal tender. An example is Maundy money. Some countries also issue precious-metal coins, which are known as non-circulating legal tender (NCLT) as their value is far below the value of the metal they contain.
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The shift to digital payments
It is not illegal to have cash at home in Australia. In fact, Australian currency is legal tender, and transactions are to be in Australian currency unless otherwise agreed or specified. However, refusal to accept payment in legal tender banknotes and coins is not unlawful, and providers of goods or services can set the terms of payment.
The use of cash and cheques is declining in Australia, with a rapid increase in digital payments. This shift is driven by the high penetration of point-of-sale terminals and the low number of ATMs in the country. The widespread ownership and use of smartphones in Australia have also played a significant role in the move towards digital payments. Mobile apps and innovations like the New Payments Platform (NPP) have made digital transactions more seamless and convenient.
The Australian government is also modernising the country's payment systems by pushing for the regulation of mobile payments such as Google Pay and Apple Pay. This move is expected to promote competition, innovation, and productivity in the economy. Digital wallets are becoming increasingly popular in Australia, with a significant shift in consumer behaviour. Digital wallets, including PayPal, nearly doubled their share of online spend from 21% in 2014 to 39% in 2024. The introduction of QR code-based payment solutions, such as eQR by eftpos, is also gaining traction in the country.
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Restrictions on cash payments
Australia has been experiencing a shift towards digital payments and away from cash transactions. This trend has been accelerated by the COVID-19 pandemic, as people have sought to avoid the risk of spreading the virus through physical currency.
In terms of specific restrictions on cash payments, the Australian Government introduced the Currency (Restrictions on the Use of Cash) Bill 2019. This bill proposed an economy-wide cash payment limit of AUD 10,000 for payments made or accepted by businesses for goods and services. Transactions equal to or exceeding this amount would need to be made electronically or by cheque. The bill also introduces offences for entities that make or accept certain cash payments of AUD 10,000 or more, with penalties of up to two years' imprisonment and fines.
The proposed cash restriction bill is an extension of existing restrictions on cash payments in Australia. For example, individuals entering or leaving the country must declare physical currency amounts of AUD 10,000 or more. Additionally, under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, businesses providing certain 'high-risk' services must report cash payments.
It is important to note that these restrictions do not make it illegal to possess or hold cash at home. However, they do encourage the use of digital payments and aim to tackle tax evasion and other criminal activities. While there is a push towards a cashless society, Australian currency remains legal tender, and providers of goods or services can set the terms of payment before a contract is entered into. For example, some businesses may indicate that they do not accept specific denominations of coins or any cash payments at all.
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Cashless society concerns
It is not illegal to have cash at home in Australia. Australian currency has legal tender status, but Australian banknotes and coins do not have to be used in transactions, and refusal to accept payment in legal tender banknotes and coins is not unlawful.
While a cashless society may sound like something out of a science fiction novel, it is a reality that is quickly approaching. Many present-day transactions already occur without cash, and several financial institutions, service companies, and governments support this shift. However, there are several concerns associated with a cashless society. Here are some of the key concerns:
- Privacy and Cybersecurity Risks: While a cashless society may reduce certain types of crime, it also raises concerns about privacy and cybersecurity. Electronic transactions leave a digital trail that can be traced back to individuals, potentially making it easier for hackers or unauthorized entities to access sensitive financial information.
- Technological Dependency and Failures: A cashless society relies heavily on technology, which can fail or experience disruptions. More than six in 10 people surveyed in the UK reported experiencing payment failures, which sometimes led to abandoned purchases or relying on others to pay. This dependency on technology can leave consumers vulnerable to system failures, technical glitches, or even targeted cyber-attacks.
- Economic Inequality: A shift to a cashless society may disproportionately impact specific groups, such as the elderly, the unbanked, or those with limited access to digital payment methods. This could create a digital divide, excluding certain individuals or communities from full participation in the economy.
- Overspending and Financial Management: The convenience of cashless transactions may lead to increased overspending and impulsive buying decisions. Without physical cash, individuals may find it more challenging to budget, control their expenses, or develop healthy financial management skills.
- Logistical Challenges: While electronic transactions offer convenience, there are also logistical challenges to consider. These include the need for reliable internet access, secure digital payment infrastructure, and ensuring equal access to digital payment methods for all segments of the population.
These concerns highlight the complexities associated with transitioning to a cashless society. While there may be benefits in terms of crime reduction and streamlined transactions, addressing these concerns is crucial to ensure a smooth and inclusive transition.
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Frequently asked questions
No, it is not illegal to have cash at home in Australia.
Yes, according to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, a person entering or leaving Australia must declare amounts of physical currency of AUD $10,000 or more.
No, businesses in Australia can refuse cash payments and choose to accept only electronic payments. However, they must clearly communicate their policy to customers before they reach the checkout.
Yes, the Currency Act 1965 places restrictions on the amount of cash that can be used in a transaction. For example, you cannot use more than AUD $5 worth of any combination of 5c, 10c, 20c, and 50c coins.
Yes, the use of cash in Australia is declining, with a shift towards digital and card-only payments, especially in the wake of the COVID-19 pandemic. The Commonwealth Bank of Australia has predicted that Australia will be cashless by 2026.
