With credit and debit cards and digital wallets becoming leading payment methods in many global markets, it can seem like cash transactions are no longer a priority for businesses. It’s true that cash is not as widely used as it was, but many customers still use cash. According to a 2022 Accenture global survey, 66% of respondents still use cash at least five times per month, and businesses need to account for this in their payment strategy.

In Australia, 13% of consumer payments were conducted in cash in 2022. For businesses looking to work with Australian customers, below is a rundown of what businesses should know about dealing with cash payments in Australia.

What’s in this article?

• What currency is used for cash payments in Australia?
  
• Cash payments trends and usage in Australia
  
• Benefits of accepting cash payments in Australia
  
• How to accept cash payments in Australia
  
• Legal and compliance considerations for cash payments in Australia
  
• Best practices for accepting cash payments in Australia
  

What currency is used for cash payments in Australia?

Australia’s currency is the Australian dollar, denoted as AUD or $. There are 100 cents in an Australian dollar. Australian banknotes are available in denominations of $5, $10, $20, $50, and $100, and coins are available in denominations of 5, 10, 20, and 50 cents, as well as $1 and $2 coins. The design and production of Australian banknotes and coins incorporate advanced security features and unique designs that reflect the country’s culture, history, and natural features.

Below are some average exchange rates between AUD and other major global currencies. Note: exchange rates fluctuate constantly.

• AUD to USD (US dollar): Over the past two years, the AUD/USD exchange rate experienced fluctuations due to a variety of global economic factors, including the pandemic, interest rate changes, and commodity prices. In 2023, average exchange rates were between 0.63 and 0.72 AUD per USD.

• AUD to EUR (Euro): The AUD/EUR rate also saw fluctuations, influenced by economic conditions in the eurozone and Australia. In 2023, the average exchange rate fell between 0.58 to 0.66 AUD per EUR.

• AUD to GBP (British pound): The exchange rate between AUD and GBP is affected by both countries’ economic health and Brexit-related developments. In 2023, the average rate ranged from 0.50 to 0.54 AUD per GBP.

• AUD to JPY (Japanese yen): The AUD/JPY rate is often influenced by risk sentiment and changes in monetary policies in both countries. In 2023, the exchange rate fluctuated between 0.0102 and 0.0115 AUD per JPY.

• AUD to CNY (Chinese yuan): The AUD/CNY exchange rate reflects the trade relationship between Australia and China. In 2023, the rate ranged between 4.55 and 4.89 AUD per CNY.

Cash payments trends and usage in Australia

In Australia, dramatically shifting trends in cash payments and usage reflect changes in consumer preferences and payment behaviors. Here’s an overview based on recent data:

• Decline in cash usage: In 2022, cash payments accounted for 13% of consumer payments, continuing a downward trend. This decrease indicates a broader transition toward digital payment methods. The Reserve Bank of Australia’s (RBA) data indicates that the volume of ATM withdrawals, a proxy for cash usage, has been consistently falling since 2007.

• Dominance of card and electronic payments: Debit and credit card payments, which remain dominant in Australia, accounted for 76% of payments in 2022. This shows Australians’ continued preference for card-based transactions. Contactless card payments, facilitated by NFC technology, accounted for 94% of in-person card payments in 2022.

• Rise of mobile and digital wallets: The adoption of mobile payments and digital wallets has grown: in 2022, one-third of in-person card payments were conducted with mobile devices in Australia.

• Growth in online and ecommerce payments: Online payments accounted for around 18% of all consumer payments in 2022. This growth is in line with the rise in ecommerce and online shopping. Digital payment methods, including buy now, pay later services, have seen increased adoption for online transactions, with a large proportion of customers using these methods for ecommerce purchases.

• Demographic variations in payment preferences: Younger Australians, particularly those aged 18–29, are leading the shift toward digital payments, with nearly two-thirds using mobile payments in 2022. Older demographics, while slower to adopt mobile and digital payments, have shown a gradual increase, with around 9% of those aged 65 and older using digital wallets in 2022—triple the number that did so in 2019.

• Impact of regulatory changes and innovations: Regulatory changes and innovations in the Australian payments system, including the New Payments Platform (NPP), have facilitated instant, 24/7 electronic transfers, further reducing reliance on cash. The introduction of Open Banking in Australia has also played a role in increasing customer trust and adoption of digital payment methods.

Benefits of accepting cash payments in Australia

For businesses, accepting cash payments in Australia offers several specific benefits, even in an environment where digital transactions are on the rise. Here are the advantages of accepting cash in Australia:

• Inclusivity and accessibility: Cash remains a primary payment method for certain demographics, including older Australians, people in rural or remote areas with limited internet connectivity, and individuals without access to banking services. By accepting cash, businesses can cater to these customers and demonstrate inclusivity and accessibility. Australia’s diverse tourist population also includes visitors from countries with a higher reliance on cash. Accepting cash helps businesses tap into this customer base.

• Immediate settlement and liquidity: Cash transactions provide immediate settlement, which improves business cash flow. Unlike electronic payments, which can involve processing delays, cash funds are available instantly. This can be especially helpful for small businesses and vendors that operate on thin margins and require quick access to funds for daily operations.

• Reduced transaction costs: Accepting cash can be more cost-effective for some businesses, especially small and micro enterprises. Unlike card transactions, cash payments do not incur processing fees or charges imposed by banks and payment gateways. For businesses conducting a high volume of low-value transactions, such as cafes or local markets, the savings that come from avoiding these transaction fees can add up.

• Simplicity and reliability: Cash transactions do not rely on digital infrastructure. This simplicity is an advantage in situations where technological complexities or failures, such as point-of-sale (POS) system breakdowns or internet outages, can disrupt electronic payments. During natural disasters or power outages, which can be relatively common in certain parts of Australia, accepting cash allows businesses to continue operating.

• Customer preference and trust: Some customers prefer cash for budgeting or privacy concerns. Paying with cash can allow customers to manage their spending more effectively and avoid digital footprints. In certain sectors, such as secondhand goods or local farmers’ markets, customers often expect to pay with cash.

• Reduced dependency on third-party providers: By accepting cash, businesses can reduce their dependence on third-party financial service providers and lower the associated risks, such as data breaches or service disruptions. This independence can be particularly appealing for businesses that are wary of sharing customer data with digital payments platforms.

• Boosting impulse purchases: Cash can encourage impulse buys, especially in retail settings where the physical act of handing over cash can feel less inhibiting to customers than using a card or mobile device.

• Compliance with customer expectations: Despite the shift toward digital payments, a segment of the Australian population still prefers—or expects—the option to pay with cash. Providing this option can increase customer satisfaction.

Digital payments are increasingly prevalent in Australia, but accepting cash can still be a route toward inclusivity, lower overheads, immediate liquidity, and operational simplicity. Balancing cash and digital payment options can help businesses cater to a wider customer base and adapt to varying consumer preferences in the Australian market.

How to accept cash payments in Australia

Legal and regulatory environment

• Legal tender laws: Australian banknotes and coins are legal tender throughout Australia. Generally, a business is obliged to accept cash for transactions, unless an alternative payment method is clearly specified before the transaction takes place (such as in online purchases).

• Anti-Money Laundering (AML) compliance: Businesses accepting large cash payments need to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). This includes identifying and verifying customer identity for transactions over $10,000.

• Tax compliance: Businesses must record all transactions, including those made with cash, for tax purposes. Businesses must keep accurate records for all sales to comply with the Australian Taxation Office (ATO) regulations.

• Fair trading laws: Under Australian Consumer Law, businesses must not engage in misleading or deceptive conduct in transactions. The law applies to all aspects of a transaction, including the transparency of pricing and the acceptance of payments.

Consumer preferences and trends

• Convenience and speed: Customers in Australia value quick transactions. Businesses should have adequate change and efficient systems in place to handle cash payments promptly.

• Safety and security: Businesses must handle cash safely. This includes protected storage, regular banking, and training staff to handle and detect counterfeit notes.

• Hygiene concerns: Some customers may have hygiene concerns around handling cash, especially related to COVID-19. Providing hand sanitizer and maintaining cleanliness at cash handling points can help address these concerns.

• Inclusivity: Accepting cash is a way to be inclusive of all customer segments, including those who do not have access to digital payment methods or prefer cash for budgeting reasons.

Legal and compliance considerations for cash payments in Australia

For businesses, handling cash payments in Australia means adhering to several legal and regulatory considerations. These regulations are designed to create transparency, prevent financial crimes, and maintain the integrity of the financial system. Here are the primary laws and regulations governing cash payments, and their implications for businesses:

Legal tender laws

• Currency Act 1965: This act defines Australian banknotes and coins as legal tender. It implies that businesses are generally required to accept cash for transactions unless they have stipulated otherwise in advance (e.g., in online transactions or specific business models, such as airlines).

• AML/CTF Act: This act requires businesses to take measures to prevent their services from being used for money laundering or terrorism financing. It includes obligations such as customer due diligence, record-keeping, and reporting suspicious transactions.

• Threshold transaction reports (TTRs): Businesses must report cash transactions of $10,000 or more to the Australian Transaction Reports and Analysis Centre (AUSTRAC).

Tax compliance

• Goods and services tax (GST) and income tax regulations: The Australian Taxation Office (ATO) requires businesses to record and report all transactions, including cash sales, for tax purposes.
  

Fair trading and consumer laws

• Australian Consumer Law: These laws require businesses to follow fair trading practices. Misleading or deceptive conduct in relation to pricing or the acceptance of payments is prohibited.
  

Counterfeit currency laws

• Crimes (Currency) Act 1981: This act makes it an offense to knowingly possess or use counterfeit currency. It puts the onus on businesses to detect and report counterfeit notes.
  

Workplace health and safety regulations

• Handling and storing cash: While not directly related to cash payments, occupational health and safety laws require employers to provide a safe working environment. This includes safe practices in handling, storing, and transporting cash to minimize risks like theft.
  

Privacy laws

• Privacy Act 1988: If a business collects personal information during transactions (e.g., for loyalty programs or customer identification under AML/CTF laws), they must comply with privacy laws regarding the handling and storage of this information.
  

Best practices for accepting cash payments in Australia

Implement appropriate cash handling procedures

• Training staff: Educate employees on handling cash, including identifying counterfeit notes, proper cash counting, and providing correct change.

• Cash management policies: Establish clear policies for cash handling, including opening and closing registers, cash-in-transit procedures, and cash reconciliation.

• Security measures: Use safes, cash drawers with locks, and other security measures to minimize theft and loss.

Maintain accurate and transparent record-keeping

• Sales recording: Set up a system (like a POS system) that accurately records cash transactions, ensuring compliance with tax obligations and aiding in financial analysis.

• Receipt issuance: Always provide receipts to customers for cash transactions to maintain transparency and for record-keeping purposes.

• Auditing and reconciliation: Regularly audit cash transactions and reconcile cash drawers to identify any discrepancies.

Comply with AML/CTF regulations

• Customer identification: For transactions over $10,000, follow the customer identification and verification procedures as mandated by the AML/CTF Act.

• Reporting large transactions: Report transactions over $10,000 to AUSTRAC to comply with Anti-Money Laundering laws.

Counterfeit detection and handling

• Detection training: Train staff to detect counterfeit notes using methods such as checking for security features in banknotes.

• Protocol for counterfeits: Develop a protocol for handling suspected counterfeit currency, including reporting to the authorities.

Improve customer experience

• Efficient transactions: Conduct cash transactions quickly for the optimal customer experience.

• Hygiene practices: In light of hygiene concerns, maintain cleanliness at cash handling points and offer hand sanitizers.

Adapt to consumer preferences and trends

• Multiple payment options: While accepting cash, also provide digital payment methods to cater to varying consumer preferences.

• Inclusivity: Be mindful that certain demographics prefer or rely on cash payments, including older adults, certain socioeconomic groups, and tourists.

Focus on safety and security

• Cash-in-transit security: If using cash-in-transit services, be sure they adhere to safety standards to reduce the risk of theft during transportation.

• In-store security: Consider security measures like surveillance cameras and secure cash handling areas to deter theft.

Privacy and data protection

• Personal data handling: If collecting personal data during transactions, comply with privacy laws in handling and storing this information.