Cash payment confusion: Your questions answered

Card payments ramped up during the pandemic resulting in confusion over how cash payments can be handled. Here’s what you need to know.

Card payments are continuing to boom during the pandemic but experts say cash usage is far from dead.

Many consumers have become used to paying by card during the pandemic to avoid the spread of the virus using notes and coins.

Despite this confusion remains about how payments can be handled, so we’ve asked the experts everything you need to know when it comes to making payments.

IS CASH STILL PROMINENT?

It certainly is.

Reserve Bank figures showed in late 2019 households used cash for about 27 per cent of all payments. RBA’s head of payments policy Tony Richards says this is expected to have fallen further during the pandemic.

“The value of ATM withdrawals in December 2020 was about 14 per cent lower than a year earlier,” he says. “Interestingly, the value of the total amount of cash on issue has risen significantly, by about 18 per cent over the past year, which indicates there is still strong demand for Australian banknotes as a store of value.”

Payment solutions company Square Australia head of business development Colin Birney says during the pandemic “there’s been a huge increase in cashless growth”.

“We saw one in three businesses turning cashless,” he says.

CAN A MERCHANT REFUSE CASH PAYMENTS?

A lot of confusion remains about this but yes, merchants can refuse cash payments.

However Richards says the merchant must clearly state their payment terms before a transaction happens. “As long as they have made these conditions clear before the customer enters into a contract or payment agreement, merchants have no obligation to accept any particular payment method, including cash.”

Many businesses who turned to card-only payments during the pandemic are reverting to offering cash as a payment option.

Republic Bondi has been cashless for a year now following the COVID-19 restrictions. Picture: Richard Dobson

ARE CARD PAYMENTS FASTER THAN CASH PAYMENTS?

Bakery owner Muz Begg who runs Republic Bondi in Sydney says during the pandemic he shifted to 100 per cent cashless transactions.

“It simplified systems, you could process transactions faster and have less congregation and less vectors for contamination,” he says. “You don’t have to wait for change and then hand it over.”

Prior to the pandemic about 74 per cent of the bakery’s transactions were already by card but Begg says, “cash had been diminishing for some time”.

“The uptake for cards had been steadily increasing but the pandemic compressed and accelerated the whole process,” he says.

CAN MERCHANTS CHARGE MORE FOR CARD PAYMENTS?

Yes they can but there’s strict guidelines, Richards says. “It cannot be more than the cost of card acceptance that the merchant pays to their bank or payments provider. And any such surcharge should be very clearly disclosed to the customer.”

Begg says customers are charged extra for paying with plastic.

WILL CASH CONTINUE TO BE A PAYMENT OPTION?

Richards says it will — many consumers will know it’s not a foolproof payment method.

“While the proportion of payments made using cash is declining, there is still a significant minority of the population that continues to regularly use cash for face-to-face payments. So the Reserve Bank is committed to providing high quality banknotes for the Australian population as long as households wish to continue using them.”

There can also be electronic outages which make it impossible to do transactions if this capability is down.

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Originally published as Cash payment confusion: Your questions answered