Cash for Necessities: Australian Government Emphasizes Backup Role during Increase in Digital Payments
On Dec. 20, the Treasury department issued a consultation paper to gather feedback from the public regarding the scope, compliance, and accessibility strategies of the cash mandate.
A week later, Assistant Treasurer Stephen Jones emphasized the importance of cash as a backup option in case of digital payment failures.
In November, the federal government mandated that essential purchases like groceries and fuel must be payable with cash.
“Sometimes systems fail, and electronic payment methods may not work,” Jones remarked.
Government data suggests that 1.5 million Australians rely on cash for over 80% of their in-person transactions, and 94% of businesses still accept cash.
Consultation and Implementation Timeline
On Dec. 20, the Treasury department released a consultation paper seeking input on the scope, compliance measures, and strategies to maintain cash accessibility.
Key areas for feedback include defining essential goods and services, determining which businesses the mandate should apply to, and considering transaction caps or time limits.
Small businesses with less than $10 million in annual turnover may be exempt, with final details of the mandate expected by late 2025 for implementation on Jan. 1, 2026.
The consultation period will end on Feb. 14, 2025.
Balancing Digital Payments and Cash Use
Despite the dominance of digital payments, cash remains crucial for many Australians, with 1.5 million individuals relying on it for most transactions.
A 2023 report from the Reserve Bank of Australia highlighted a decline in in-person cash payments from 32% in 2019 to 16% in 2022.
Cash accounted for 13% of all payments by number and 8% by value, including online transactions.
The decrease in cash usage is influenced by factors like contactless payments, ride-sharing services, and cashless public transport.
However, cash serves as a safety net during emergencies like natural disasters and digital disruptions, and the government’s mandate aims to maintain this safety net while adapting to the digital shift.
