Minister Says Cash an Important Backup If Digital Payment Systems Fail

Australian banknotes and a one dollar coin. Squirrel_photos/pixabay

A week after releasing a consultation paper on the scope of cash use, Assistant Treasurer Stephen Jones reiterated the significance of cash as a fallback during digital payment failures.

“Sometimes systems go down, sometimes electronic payment systems don’t work,” Jones stated.

In November, the federal government mandated that businesses must accept cash for essential purchases, including groceries and fuel.

“We’ve all been standing at a queue in a supermarket or a shop somewhere, and they say the EFTPOS or the payments system has gone down, the power’s out. We want to ensure that that doesn’t become a crippling event right across the economy,” Jones told the Australian Broadcasting Corporation (ABC).

Financial Services Minister Stephen Jones at a press conference in Canberra, Australia, on Oct. 31, 2022. AAP Image/Mick Tsikas

Government data reveals that around 1.5 million Australians rely on cash for more than 80 percent of in-person payments, while 94 percent of businesses continue to accept it.

Consultation and Implementation Timeline

On Dec. 20, Treasury released a consultation paper inviting public feedback on the cash mandate’s scope, compliance measures, and strategies to maintain cash accessibility.

The government seeks insights on key aspects, including the definition of essential goods and services to ensure cash access for basic needs, determining which businesses the mandate should apply to, and the introduction of transaction caps or time limits.

Assistant Treasurer Jones noted that small businesses with an annual turnover of less than $10 million might be exempted. The final details of the mandate will be announced in late 2025, with implementation set for Jan. 1, 2026.

In a joint statement, Treasurer Jim Chalmers and Jones underscored the importance of preserving cash as a payment option, stating: “People are increasingly using digital payment methods, but there will be an ongoing place for cash in our society under the Albanese Government. This consultation will help us understand how we preserve cash as a payment option.”

The consultation period will conclude on Feb. 14, 2025.

Balancing Digital Payments and Cash Use

While digital payments dominate, cash remains vital for many Australians. Around 1.5 million individuals continue to rely on cash for the majority of their transactions.

The Reserve Bank of Australia’s (RBA) 2023 report, Cash Use and Attitudes in Australia, highlighted a decline in the share of in-person cash payments, from 32 percent in 2019 to 16 percent in 2022.

For all payments, including online transactions, cash accounted for 13 percent by number and 8 percent by value.

The reduction in cash use is driven by factors such as the rise of contactless payments, ride-share services, and cashless public transport systems.

However, cash continues to provide a critical safety net during emergencies, including natural disasters and digital outages.

The government’s cash mandate aims to preserve this safety net while accommodating the shift towards digital transactions, ensuring that vulnerable populations and the broader economy remain safeguarded during unforeseen disruptions.