Businesses selling “essential items” such as groceries and fuel will be required to accept cash for purchases permanently, the government has announced as it progresses its Payments Strategic Plan with plans to phase out cheques by 2029.
Although just five per cent of Australians still use cash for most of their purposes, Treasurer Jim Chalmers said requiring businesses to continue accepting it “means those who rely on cash will not be left behind.”
“We know that most people like to pay digitally and we know the direction of travel is towards digital payments,” he said in announcing a new mandate that will ensure that “cash will be an ongoing feature of the economy on our watch.”
“For many Australians,” he said, “cash is more than a payment method. It’s a lifeline.”
Although nearly 94 per cent of businesses currently accept cash, the change will see all businesses – apart from small businesses meeting “appropriate exemptions” – required to continue doing so under a mandate expected to begin on 1 January 2026.
A Treasury consultation later this year will decide which types of businesses will be considered ‘essential’ for the purposes of the mandate, and will also consider issues such as access to cash in regional areas and by people unable to use digital payments.
A surge in credit and debit card payments – which increased from 31 per cent of purchases in 2010 to 77 per cent in 2022 – has come at the expense of cash, which the RBA says decreased from 62 per cent of purchases to just 13 per cent in the same time.
“There’s nothing more frustrating than dealing with a bank that doesn’t want to handle money,” Minister for Financial Services Stephen Jones said in noting the law “doesn’t currently say that everyone must accept two 50-cent pieces for a dollar transaction.”
Reshaping the payments ecosystem
The move comes as the government modernises Australia’s payments system based on its five-pronged Payments Strategic Plan, which Chalmers said reflects its goal “to modernise our financial system but to do it in a way that doesn’t leave people behind.”’
Pundits predicted years ago that Australia would be 98 per cent cashless by this year – yet while businesses are currently within their rights to refuse to accept cash, Chalmers said this excludes many groups because “cash can be a really important lifeline.”
Under a separate change announced simultaneously, the government is also giving banks a “long lead time” to phase out paper cheques – which will stop being issued by 30 June 2028 and be discontinued entirely by 30 September 2029.
Use of cheques has dropped by 90 per cent over the past decade, Chalmers said, and no participants in the RBA’s three-yearly Consumer Payments Survey have reported writing a cheque since 2010.
Businesses have embraced digital payments since then, with the government expanding its oversight of new payment methods, and QR code payments the latest alternative gaining traction as retailers target fraud and streamline payment processes.
Although the value of bank notes in circulation doubled between 2010 and 2021, the RBA noted “subdued” demand for low-value banknotes during the same period – with some suggesting this points to heavy use by criminals who favour large denominations.
For all the momentum behind digital payments – and despite RBA indicators suggesting most cash is being hoarded as a ‘store of value’ – Chalmers said preserving people’s ability to use cash when they need to “can be a really important lifeline.”
Cash “gives people peace of mind and a sense of security,” he said, “and that’s why we are making it an ongoing feature of the economy even as people make a range of choices about how they pay their bills and participate in our economy.”
