Major Decision on Cash Usage Sparks Debate Over Transition to a Cashless Society

The Reserve Bank of Australia (RBA) emphasized the crucial role cash plays for numerous Australians, especially those residing in rural and distant regions. In a statement, the central bank highlighted the ongoing necessity of cash accessibility for these communities.

The RBA noted the significance of maintaining a sustainable cash distribution network over the long term. It expressed backing for the proposed regulatory framework aimed at governing cash distribution services. This framework is set to empower public sector entities with emergency powers, ensuring the continued operation of cash distribution services nationwide.

Additionally, the RBA identified potential benefits in adjusting card system regulations, such as interchange fees, to support the sustained circulation of cash within the country.

The RBA affirmed its endorsement of industry initiatives geared towards enhancing the robustness and contingency measures of the payment system. The aim is to ensure that the system consistently meets the high reliability standards expected by the Australian public.

“Members expressed their support for industry efforts to strengthen resilience and contingency arrangements so that the payments system meets the high reliability standards expected by Australians,” the RBA said.

A consultation paper on regulatory action is scheduled for publication this month.

Swinburne finance expert Professor Steve Worthington said he welcomed the RBA’s position, adding that Australians have the right to avoid credit card surcharges by using legal tender.

He also suggested the RBA “take over” the distribution of cash and run it as a public service.

“They could also assist in the creation of jointly owned distribution organisation by involving the major banks as operators of this service,” Worthington said.

“This could run like The Link in the UK, who run the Link ATM network and distribute cash to every corner of the UK.”

A recent Reserve Bank survey found consumer payments made in cash have fallen from about 70 per cent in 2007 to just 13 per cent in 2022.

Under the nine-page draft published in October, grocery and fuel retailers must accept up to $500 in cash payments.

The bigger grocery and fuel retailers that are captured under the mandate can still, however, be granted an exemption if they can prove an exceptional circumstance. 

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