Commonwealth Bank believes cash use in Australia could soon fall to ‘very low or non-existent levels’. (Source: Getty)
Commonwealth Bank (CBA) believes cash could become “non-existent” in Australia as the government prepares to introduce a law forcing certain businesses to always carry and accept physical money. Draft regulations for the legislation were quietly released on Friday and it’s much smaller in scope than originally anticipated.
In preparation for the law, stakeholders in the cash realm have made submissions to give their two cents on how it should be implemented and operated for the years to come. Australia’s biggest bank is supportive of the cash mandate but added a notable stipulation in its recommendation to the government.
“We note that it is important that a review point is built into any legislated mandate once cash usage falls to very low or non-existent levels,” the bank said.
Despite this seeming prediction that cash could reach non-existent levels, the bank’s chairman, Paul O’Malley recently assured one concerned Australian shareholder that cash will stick around into the future.
“I think cash is still absolutely critical,” he told them at the bank’s annual general meeting last week.
“We’ve demonstrated by our actions over the last few months working with the industry to make sure that cash supply and cash availability continues.”
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CBA’s language of “when” not “if” is backed up by the Australian Banking Association (ABA), who predicted cash usage could fall as low as 4 per cent by 2030.
The Reserve Bank’s figures from 2022 showed cash use for all transactions had dropped to 13 per cent. Back in 2007, it was nearly 70 per cent.
The trend reflects how Aussies are preferring to use digital forms of payment, like credit and debit cards, as well as their phones and watches, rather than physical money.
Businesses owners have also hopped on the cashless bandwagon, with some refusing to take cash due to costs, security, and other issues.
RMIT’s Professor Angel Zhong told Yahoo Finance that the transition to a cashless society is “well underway” and predicts Australia will be “functionally” cashless by the end of the decade.
“I’m not saying that we won’t see cash at all and I’m not saying that cash will lose its value,” Zhong said.
“It’s more about the choice of consumers because, when we look at the statistics, we see the rise in consumer preference in using digital payments.
“It’s more about how digital payments are becoming the mainstream payments for consumers.”
Being functionally cashless means that cashless payments are the dominant approach for consumers and retailers.
In November, Labor revealed it wanted to introduce a law that would require certain businesses to always carry and accept cash.
Treasurer Jim Chalmers said this bill would particularly protect the 1.5 million people who use cash to make more than 80 per cent of their in-person payments.
The government indicated it wants to have the law implemented by 1 January, 2026.
A consultation period lasted from December to February, and dozens of stakeholders revealed how they felt the law should work.
It’s meant to target essential goods and services, and a December discussion paper hinted at what type of businesses would be affected by the legislation.
It suggested that supermarkets, pharmacies, dentists, GPs, hardware stores, insurers, pet stores, vets, service stations and mechanics will be on the essentials list.
But on Friday, the government revealed in its draft regulations that the list will actually be much shorter.
The government wants to bring in a law that would force certain businesses to always accept and carry cash. (Source: Getty) · Francisco Martins via Getty Images
In its current state, it will only apply to:
Petrol stations and supermarkets via mandatory industry codes of conduct
Small businesses with aggregate turnover of more than $10 million
And the mandate will be limited to in-person transactions of less than $500
“The mandate will apply to fuel and grocery retailers as this will best meet consumer expectations to be able to pay for essential goods in cash, while minimising the costs and risks to businesses,” Assistant Treasurer Daniel Mulino said.
“This is a balanced, practical, and sensible step to support cash users and give consideration to businesses.”
Once implemented, the government will review the mandate after three years to ensure it’s working as intended.
There is now a new consultation period on the draft regulations that will be open until October 31. You can make your submission here.
At the moment, many supermarkets and fuel stations already carry and accept cash.
But Aussies have hit out at small businesses like cafes for refusing their physical money.
Some have questioned whether this new law will actually do anything productive.
“This doesn’t go far enough. Cash should be acceptable everywhere,” said one concerned Aussie named Heather.
“It’s a joke. Most places are small businesses and they’re exempt?” added Grant.
Consumer group CHOICE urged the government to reconsider its “problematic” approach to small businesses.
“Our concern with the small business exemption is that it will dramatically reduce the impact of the mandate for regional and remote parts of Australia, which is where it is most important to guarantee the continued role of cash,” it said in its submission.
“Many of these areas are only serviced by small businesses (particularly First Nations communities), and so if the mandate excluded small businesses altogether, it would not help regional communities.”
CHOICE is concerned that if bank branches continue to close and access to cash in regional and rural areas is tightened because it’s too difficult to transport physical money there, then it could force those regions into a state of cashlessness.
“The mandate as proposed cannot be considered to offer any kind of solution or certainty for these communities,” it added.
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