Overview of Payment Methods and Current Debate Recent government proposals to mandate cash acceptance for essential goods, combined with the planned phase-out of cheques by 2029, reflect a constantly-changing landscape of payments in Australia that is relatively unpredictable.
Businesses must be aware of their legal obligations regarding payment methods to ensure compliance and to meet consumer needs.
Legal Status of Cash in Australia Cash remains valid for transactions across the country.
In Australia, Australian banknotes are considered legal tender under Section 36 of the Reserve Bank Act 1959 , and Australian coins are legal tender under Section 16 of the Currency Act 1965 .
Businesses Can Refuse Cash While cash is legal tender, businesses are not required by law to accept it unless they have explicitly agreed to do so in advance with the customer.
Businesses currently have the legal right to choose whether or not to accept cash, provided they inform customers in advance about the available payment methods. This is typically done by displaying signs that indicate only digital or card payments will be accepted.
If a business refuses to accept cash, it must offer an alternative payment method (such as Eftpos or credit card) without charging additional fees on that payment method that would not otherwise be incurred through cash.
Businesses May Be Mandated to Accept Cash in 2026 A recently announced proposal by the Australian government will require businesses to accept cash when selling essential goods like groceries, fuel, and medicine starting 1 January 2026. The mandate will apply to essential services, including supermarkets, pharmacies, petrol stations, and utilities. The government has promised exemptions for small businesses, especially those in remote areas without bank access, may be exempt from this mandate. Further details will be released in 2025.
Purpose of Government Reform and Reception The use of cash has been steadily decreasing in Australia, particularly since the onset of the COVID-19 pandemic. This shift is part of a broader trend towards digital and contactless payments, making it harder for cash distributors to maintain services.
The government argues that while cash usage is declining, it is still a vital tool for many Australians, especially in emergencies or when digital systems fail. By mandating cash acceptance, the government aims to ensure that no one is excluded from the economy due to a lack of access to digital payment methods, particularly older Australians and individuals in rural and regional areas.
COTA Australia, the peak body for older Australians, has strongly supported this reform, noting that half of Australians over 65 and 35% of those aged 50-65 use cash regularly.
The Legal Status and Use of Cheques The Australian government has announced that cheques will no longer be issued by mid-2028, and they will cease to be accepted by September 2029. This gradual phase-out is intended to give businesses and customers time to transition to digital payment methods, though some people may still need support to make the switch.
Challenges in Transition The transition from cheque payments to digital methods may be difficult for some customers, particularly older Australians or those in rural areas who rely on cheques for transactions.
The Treasury is working closely with banks and financial institutions to ensure a smooth transition for cheque users.
Implications for Businesses Businesses may consider using checks in 2024, as they continue to be accepted for another 4-5 years.
However, they should prepare for the eventual removal of cheque payments by supporting their customers to use alternative payment methods, including digital banking services.
Card and Other Digital Payments Card payments are widespread across businesses and are a legal alternative payment method to cash.
Businesses are legally allowed to impose surcharges on credit card payments, largely to recuperate any expenses required by the card reader. Excessive surcharges (above a reasonable amount) are prohibited under Australian consumer law. A payment surcharge is considered excessive if it exceeds the 'cost of acceptance'. For example, if your cost of acceptance for Visa Credit is 1% you can only charge customers the same amount.
Potential Bans on Card Surcharges In recent years, there has been growing pressure to ban excessive surcharges, particularly on credit card payments. Several major Australian banks and government officials have expressed support for banning these surcharges to reduce consumer costs.
Considerations for Business-Owners Businesses should prepare for the upcoming cash mandate in 2026 and the phase-out of cheques. By adopting digital payment systems and ensuring accessibility for all customers, businesses can navigate this transition and stay compliant with future legal requirements.
Understanding Legal Obligations : Businesses must understand their legal responsibilities regarding the acceptance of cash and digital payments. While there is no legal obligation to accept cash at present, businesses must ensure they comply with the government’s upcoming mandate if they fall under the scope of the new regulation. Implementing New Payment Systems : As the government’s cash mandate comes into effect in 2026, businesses will need to adapt their payment systems to accept cash, while also providing digital alternatives. Small businesses may face challenges in adapting to these new payment systems, particularly if they do not have the capacity to handle cash payments. The Role of Consumers : It will be essential for consumers to stay informed about the evolving payment landscape. For those who are hesitant about digital payments, particularly older Australians, continued support and education will be crucial to ensure that no one is left behind in the shift to cashless transactions.Wadlow Solicitors are here to help your business remain compliant with business legislation and mitigate unwanted implications from noncompliance. For expert and personalised legal advice, call Wadlow Solicitors on (08) 8212 2955 .
