• Mark Walbank

The Treasurer admits that cash payments are a critical component of our economy.

The Treasurer, Josh Frydenberg, admits that cash payments are a critical component of our economy and must be protected by policy and law in a new official report.

Finally, our policymakers are beginning to realise the cash-loving Australian public, cash rights activists like Jason Bryce, business owners like Stuart Mackaway, many others and I have been pointing out for many years. For my blog on this issue, click here.



Payments system review
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The Australian Treasurer, on 30 August 2021, released the official Payments System Review. I am attaching a copy of the whole report for readers who want to know more.

I must say that I was very pleasantly surprised that the report is not all about new payment technologies. Quite to the contrary, cash is mentioned 34 times in the report, and the Treasurer makes an obvious point about how critical cash is to the Australian economy and national security.

The report says that non-cash payment systems are inherently unreliable because they can suffer 'technical malfunctions or operational mistakes' (Payments System Review, 2021: 7). Furthermore, as I said elsewhere in my blog, these non-cash payment systems are open to outages (communications and electricity), hacking by malicious hackers and cyber-warfare.

The Treasurer's report further affirms that: 'While the use of cash may continue to fall in use over time relative to other means of payment, it is expected to remain an important method of payment well into the future, not only for vulnerable customers, bust as an important "back-up" from of payment not tied to the digital economy' (Payment System Review, 2021: 7).

Contrary to the Treasurer, I believe that the use of cash payments in Australia might increase, especially now that merchants are becoming quite aware of the costs they have to carry regarding accepting non-cash payments. Further, with the possibility of a COVID-19 induced prolonged recession/depression, more consumers might start paying in cash. In times of financial crises, a very significant number of people want to keep cash under their mattresses and pay for cash for all small to medium purchases. Reports from the RBA confirms this. I have quoted only one of the RBA's reports on cash intake during financial crises.


I had personally heard a story from bank workers here in Brisbane who told me that they had customers when the COVID-19 pandemic broke out coming with suitcases demanding to withdraw all their savings. The sums they wanted to withdraw ran from tens to hundreds of thousands of dollars. The bank could not oblige immediately, which created an angry reaction in these particular customers. The bank needed a few days to get the required cash for these customers.


I don't want to live in a society and economy where I cannot withdraw all my money from my bank immediately for any reason. Do you?

This bank's customers were not interested in plastic cards or numbers on their computer or smartphone screens. Instead, they wanted something that they could touch, smell, and that had an actual store of value. They wanted something they could put away somewhere safe. They wanted cash. They wanted something real.

The Treasurer report sums the Australian Government's position on cash by stating that: 'Given this, the distribution of cash will also remain a critical system that ensures that there is an adequate supply of cash available across the economy' (Payments System Review, 2021: 89, my emphasis).

In other words, what the Government is reaffirming is that cash is the only reliable payment system. You can use it when we have bushfires and floods, and consequently, the electricity and communications are out. Cash is impervious to hacking and cyber-warfare. Cash is there for everyone when we have regular telecommunications outages as we did in 2018/2019.

One can infer safely from the Treasurer's report that ATMs and bank branches have to stay open, and cash payments should be available to everyone. The report also implies that retailers must continue to accept cash.

In my reading of the report, if the Government continues to tolerate businesses who refuse to accept cash payments, then the same tolerance should be extended to those businesses who refuse non-cash payments. In reality, it is impossible to police millions of companies that operate in Australia. However, if the Government is willing to crack down on businesses who refuse cash payments, then and only then I will accept a similar crackdown on businesses who refuse to accept non-cash payments.




Cash Demand During Covid-19
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'The RBA conducted a survey in February 2020 to investigate cash and card acceptance by retail merchants (Delaney, McClure and Finlay 2020). The survey found that the vast majority of consumer-facing businesses that had a physical presence accepted both forms of payment, with 99.4 per cent and 98.3 per cent of businesses accepting cash and card, respectively (Guttmann et al., March 2021: 9). I am attaching that report here too.

As a seasoned supporter of cash payments, I am encouraged by these numbers. However, from my personal experience, the acceptance of cash payments reported in the survey results above seems a bit too high. It would be great if the figures stayed that way. Unfortunately, surveys are often not the best way to gauge what is really going on. In this case, I suspect respondents said they equally accepted cash and non-cash payments because they suspected that the people behind the survey wanted to hear that. Government policy is that merchants should not refuse to accept cash payments.

According to YouGov recent poll, 6 million Australians are staunchly cash payers. Germans, who live in one of the most innovative and most developed economies in the world, have 'an aversion to contactless payments that is uncharacteristic of comparable European economies such as France or Great Britain' (YouGov, 2021: 12).



YouGov-Global-Banking-and-Finance-Report-2021
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The Treasurer's report confirms what we, cash rights activists, already knew: a cashless economy is a vulnerable economy, prone to complete outages due to extreme weather events associated with climate change and open to hackers' attacks and cyber-warfare.

A cashless Australia is not in its economic or national security interests. One third of Australians prefer to pay in cash. We believe is wrong that one third of Australia should be disenfranchised to serve the interests of big banks and credit card networks. Having decent amount of options about how to pay is a consumer right. It is also a human right.


However, there are glaring gaps in knowledge about one side of the payments market: merchants. In the quoted surveys and reports, it is consumers who have a voice and who are asked their opinions. If there is anything about what really merchants want, that information is really scant. This needs to change, so we get a more balanced view of the markets for various payment technologies, which are double-sided. There are the consumers, on one side, and there are the merchants, on the other.


We support the petition asking the Government to ensure the rights for Australians to pay in cash for goods worth up to $10,000.

We are encouraged by the signs the Government is sending regarding cash payments.

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