Cash usage is down, but can businesses refuse to accept “legal tender” from those who can’t or won’t go digital?
There is no doubt that the coronavirus pandemic has created unprecedented change in the lives of Australians.
One aspect of our lives that has been significantly impacted is how we pay for goods and services.
As the coronavirus can be spread by touching objects, businesses and consumers have used the pandemic as a way to avoid the use of “legal tender” (coins and banknotes).
Instead, they choose to use more hygienic cashless payment solutions like tap and go card payments, digital wallets, “buy now, pay later” services and in-app payments.
But the question now is, can businesses refuse to accept cash as a form of payment?
The answer is yes.
The Currency Act 1965 (Cth) and the Reserve Bank Act 1959 (Cth) governs currency and legal tender in Australia.
It is currently not illegal for Australian businesses to refuse to accept cash provided that they inform consumers of their position before the conclusion of any “contract” for the supply of goods or services.
Take one vending machine, for example. If the machine has a sign that states cash is not an acceptable form of payment before you place an order, then there is no obligation for the company that owns the vending machine to offer cash as an option of payment.
However, the Reserve Bank of Australia said any business that refuses to accept cash as payment for an existing debt when no other form of payment has previously been stipulated could face legal implications.
For example, a supplier may not be able to force a consumer to use another method of payment to settle his debt.
The cost of cash for companies
At November 2018 Australian Payments Summit, RBA Governor Philip Lowe said: “It is now easier than it has been to conceive of a world in which banknotes are used for relatively few payments; this money becomes a niche payment instrument.
Governor Lowe’s sentiments have sent a very strong message to businesses across Australia.
As fewer people pay for goods and services in cash, the cost of cash transactions is likely to increase.
This increased cost does not even take into account other hidden costs associated with cash payments, including manual handling (e.g. deliveries to the bank), fraud mitigation, installation of CCTV cameras, and costs development (for example, the creation of a location for the physical cash register. ).
Get rid of money
In his Payments System Council Annual Report published in 2020, the RBA reported that Australians were making around 560 electronic payments – on average – compared to 250 a decade earlier.
The RBA also revealed that while the use of cash is down, vulnerable members of society still depend on it to make payments.
Cash users tend to be older, have lower family income, live in regional areas, and have limited internet access.
When the UK conducted its independent review of access to cash in 2019, it found that 17% of its population would struggle to cope in a cashless society because the technology does not work for everyone.
Even though cash is only used for 2% of payments in Sweden, the government has refrained from adopting a completely cashless society due to the dangers it poses to its citizens, such as the risks increased isolation, exploitation, indebtedness and increased costs.
Despite these figures, the Commonwealth Bank of Australia has predicted that Australia could be cashless by 2026, with statistics confirming a steady decline in cash transactions from 69% in 2007 to 47% in 2013 and 37% in 2016.
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