A federal government plan requiring businesses to accept cash for essential goods has earned conditional support from industry leaders, who fear cash is becoming expensive to use and difficult to access in regional Australia.
Under a proposal unveiled by Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones on Sunday, businesses would be mandated to accept cash for essential goods, like groceries, fuel, and medicine.
As it stands, businesses are not obliged to accept cash, so long as they clearly outline their alternative payment options to the customer.
Card, mobile wallet, and digital transactions now make up the vast majority of payments in Australia, with just 13% of transactions using cash in 2022, according to the Reserve Bank of Australia.
However, older Australians are more likely to use cash for day-to-day purchases than their younger counterparts, and cash remains the preferred form of payment for many in regional and rural locations.
The government argues mandating cash acceptance for essential goods would protect those customers.
“For many Australians, cash is more than a payment method; it’s a lifeline,” Chalmers said.
The goverment will also assess “what further steps are required to ensure the long‑term and sustainable distribution of cash to enable adequate access,” he continued.
Lawmakers will open consultation over the plan, which is expected to come into effect in 2026.
Small businesses will also exempted from the mandate, with the exact shape of those carve-outs yet to be determined.
Easier access to cash alongside mandate
The proposal has earned early support from the Australasian Convenience and Petroleum Marketers Association (ACAPMA), the industry group representing service station operators across the country.
Around 20% of service station customers pay using cash, rising to 30% in regional areas, ACAPMA CEO Mark McKenzie told SmartCompany.
Hard currency is particularly important for petrol stations in case of natural disasters and power outages, where access to fuel is essential.
But McKenzie fears the closure of bank branches across regional Australia is making it harder for businesses to accept cash, adding extra costs for businesses forced to drive to the next town over for their nearest bank branch.
“These issues of cash access and affordability of cash services for businesses will need to be addressed or the mandate will simply push up costs for our customers,” he said.
Simply enforcing cash usage without improving access will “open traps for the unwary,” McKenzie continued.
Small business exemptions welcomed
Other industry leaders are focused on how small businesses would be exempted from the mandate, allowing them to accept card and digital payments only.
David Inall is chief executive officer of MGA Independent Businesses Australia, which represents independent supermarkets nationwide.
In a statement provided to SmartCompany, Inall said the group has not yet consulted with members about the proposed cash mandate, but it broadly supports the plan to exempt some small businesses.
“Our early comment is that there should be a carve-out for certain small businesses, allowing them in certain circumstances to say no to cash as some regional grocery stores are located in towns where there is no bank,” he said.
The hassle of depositing cash is not the only compliance cost associated with cash acceptance, he added.
“For a small business, accepting cash adds additional compliance challenges such as staff training, banking, balancing the register, especially when cash was likely to be such a small component of the total monies received for the day.”
ACAPMA intends to submit its views to the formal consultation after surveying its members.
Banking ‘hub’ model gains support
A Senate committee report into regional bank closures recommended a “robust” branch closure process, and giving the banking regulator power to approve or defer any branch closure request.
The federal government is yet to formally respond to that report, and it is not immediately clear how the new cash mandate will interact with the committee’s findings.
Beyond measures to limit branch closures, or carveouts for small businesses, there is a third option to ensure its access in regional Australia: a ‘community hub’ system with a rotating roster of bank services.
Professor Steve Worthington, a payments system expert and academic at Swinburne University of Technology, told SmartCompany the system is already being deployed in the UK.
“It’s more like a shared bank branch,” he said.
“The big banks would share the hub and have a presence there, say, one day per week.”
McKenzie also voiced his support for the practice, noting the use of a similar system in New Zealand.
With details about the cash mandate yet to materialise, Professor Worthington stressed that cash remains a vital part of the Australian economy, particularly in disaster-affected areas.
“There’s lots of outages, the digital systems do break down, and that’s when everyone has to fall back on cash,” he said.
“And if there’s no cash to be to be used, or no cash you can access, then we’re in real trouble.”
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