The Federal Government has proposed a mandate to ensure Australians can continue to pay with cash for essential items from 2026, but it remains unclear whether hospitality venues will be affected.
In the proposal released on 18 November 2024, the Government also confirmed the phasing-out of cheques as legal tender by 2029.
It will mandate that businesses must accept cash when selling essential items, with “appropriate exemptions for small businesses”.
The Treasury will commence consultation before the end of 2024 on which businesses supplying essential goods and services should be covered by the mandate. The consultation will also consider the needs of those who rely on cash, including people in regional areas and those unable to use digital payments, as well as the impact on businesses, particularly small businesses.
The announcement comes amid a Government crackdown on excessive debit surcharges.
The RBA is responsible for regulating the payments system and is undertaking a review of merchant card payment costs and surcharging, with its first consultation paper released in October 2024.
The Government said it was “prepared to ban debit card surcharging from 1 January 2026”, subject to the consultation undertaken by the Reserve Bank.
“People are increasingly using digital payment methods, but there is an ongoing place for cash in our society under the Albanese Government,” Assistant Treasure the Hon Stephen Jones MP said in a statement.
“Mandating cash for essential purchases, such as groceries and fuel, means those who rely on cash will not be left behind.”
It has been estimated that 1.5 million Australians use cash to make more than 80 per cent of their in‑person payments. And according to the most recent data, up to 94 per cent of businesses continue to accept cash.
Cash mandates have been enforced in other countries including Spain, France, Norway, and Denmark, and are also in place in some US states including Colorado, Illinois, Montana, Massachusetts, New Jersey, and New York.
Final details of the mandate will be announced in 2025. Subject to the outcomes of consultation, the mandate would commence from 1 January 2026.
The Government also released its Cheques Transition Plan, which will ensure the phase out of cheques in an orderly and planned way. Under the Plan, cheques will only stop being issued by 30 June 2028 and stop being accepted on 30 September 2029.
The usage of cheques has declined by 90 per cent in the last 10 years and many banks and financial institutions are ending cheque issuance for new customers.
To manage this industry trend, the Government is acting to give customers and businesses the certainty and the assistance they need to switch to other payment methods.
“We are cracking down on excessive surcharging, expanding the RBA’s powers to regulate new payments technologies, supporting an industry‑led transition away from the Bulk Electronic Clearing System and have committed over $180 million since being elected to tackle scam activity across the economy,” the Assistant Treasurer said.
“These reforms are all about modernising Australia’s payments system to ensure our financial sector is competitive, efficient and delivering for the economy and the Australian people.”
