What was claimed
It is illegal for Australian businesses to refuse cash payments.
Our verdict
False. Businesses can choose which payment types they accept.
Federal MP Bob Katter reckons a cafe in Parliament House acted illegally by refusing to accept cash to pay for a meal, but his claim is fishy.
The outspoken member for Kennedy says the eatery broke the law when initially knocking back his $50 note as payment for a plate of fish and vegetables. However, Katter’s assertion businesses are legally obligated to take cash is false.
The Reserve Bank of Australia (RBA) and Australian Competition and Consumer Commission (ACCC) say businesses can choose which payment types they accept, so long as they make buyers aware of payment terms before purchase.
The dispute over the legality of cash was sparked when Katter tried to buy a meal at a parliamentary cafe on February 6, but reportedly had a $50 note turned down by the cashier.
Speaking to Sky News Australia the following day, the MP said he told the cashier not accepting cash was illegal.
“She (the staff member) said, ‘We don’t accept cash,’ and I said, ‘Well, too bad for you, you have to. It’s legal tender and it’s illegal for you not to take cash,'” Katter said in the interview.
“I said, ‘No, no, no, I will stand here and you’ll accept this legal tender. If you don’t you’re breaking the law’,” Katter said.
“So the manager came down, and he ran off and came back and said, ‘Yeah it is the law, we do have to accept cash.'”
The Far North Queensland politician’s comments were reported by various media outlets including The Sydney Morning Herald, news.com.au and The New Daily.
Despite Katter’s insistence the cafe was obligated to accept cash, no such law exists. It is true Australian banknotes are legal tender, as stated in section 36(1) of the Reserve Bank Act 1959, but that does not mean a business has to automatically accept cash as payment.
The RBA says a business can set the terms of payment before entering into a “contract” to supply the goods or services.
“For example, some vending machines, parking meters and road toll collection points indicate by signs that they will not accept low denomination coins. Some road toll collection points indicate that they will not accept any cash at all,” the RBA website states.
“If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment.”
The ACCC, Australia’s consumer market regulator, provides similar information about cash payments.
“Businesses don’t have to accept cash,” the ACCC website states.
“Businesses can choose which payment types they accept … This includes whether they will accept cash payment. However, consumers must be made aware of these terms and conditions before they make a purchase.”
Two consumer law academics told AAP FactCheck that Katter was misguided in thinking the parliamentary cafe was legally obliged to accept cash.
“Businesses can choose whether or not to accept cash. It is not illegal to refuse to accept cash,” said Jeannie Paterson, a law professor at the University of Melbourne.
“There may be reason for preserving cash and for encouraging businesses to accept cash. But it’s not the law.”
Paterson said the fact cash was legal tender meant it cannot be rejected as a way of paying an already incurred debt.
Justin Malbon, an adjunct professor at Griffith University’s law school, agreed there was no law in Australia forcing businesses to accept cash.
In Katter’s case, the fish dinner dispute would more likely be a matter of contract law, he told AAP FactCheck.
“If so, Katter would have to sue the retailer for breach of contract in a court or tribunal,” Malbon said in an email.
“He would have to point to some implied contract term in which the business agreed to accept cash, unless it said otherwise (e.g. by a ‘We don’t accept cash’) sign.”
If the cafe didn’t have a sign indicating it did not accept cash, and a court or tribunal also found there was a contractual obligation to accept cash, that could be a breach of contract, he said.
If so, the court or tribunal could order the cafe to pay Katter compensation for any “loss” incurred in not being able to buy his plate of food, Malbon said.
Malbon was doubtful a court would find the cafe was obligated to accept cash. And even if it did, Malbon said breaching a contract was generally not illegal.
“If I breach a contract, I don’t breach the law. I simply breach a contract, which is not the same thing,” he said.
“So bottom line, Katter says non-acceptance of his offer to pay in cash is ‘illegal’. He needs to tell us what law has been breached.”
Katter’s office did not respond to questions from AAP FactCheck about which laws the cafe allegedly breached.
AAP FactCheck has previously debunked claims customers can take goods for free if businesses refuse cash.
The verdict
The claim that it is illegal for Australian businesses to refuse cash payments is false. There is no law in Australia that forces businesses to take cash payments. The Reserve Bank and ACCC both say businesses can choose which payment types they accept, but must be upfront about their payment terms before purchase.
False. The claim is inaccurate.
Regardless of the inaccuracy of Katter’s comment about the legitimacy of cash, his wider point was that it is foolhardy to rely on ‘magic plastic’ credit/debit cards. The ANZ has begun to phase out some ATM branches in SYD, they will no longer accept cash. If all banks refuse cash then Australians are completely captive to a credit system – if a bank wishes to play the retail market it could decide in which shops or businesses we are ‘allowed’ to use their cards. As Katter said, in the absence of cash the bank can decide if we are able to buy a loaf of bread.
Just wondering how the magic plastic fared in Victoria yesterday with 500,000 customers cut off from power….?
agree totally zut alors.
If banks started doing this, there would probably be bigger things to worry about.
People (and businesses) prefer electronic payments because they are more convenient and more secure.
They may be more convenient but definitely less secure due to hacking of accounts & identity theft which regularly occurs. For example, ask someone at the top of the IT architect/engineer tree if they ever use paywave.
In an extended power blackout we will see how convenient consumers & businesses find electronic payments.
In an extended power blackout, if it’s extensive enough, we’ll see a lot more than that…
If we cop a big enough surge of solar activity, and enough transformers in the grid blow up, it’s Mad Max time.
The bank will be closed along with everything else that takes cash. Except your girlfriend.
It is more secure. Cash can be easily lost and miscounted. It needs to be stored securely on site and regularly transported offsite.
Well, I am one and yes, I use it all the time. Particularly Apple Pay is one of the most secure and least defrauded payment methods available.
This is like arguing we should all keep a horse and buggy around in case fuel shipments are disrupted.
Good point, we only have two weeks worth in the country. I’d better oil the harness.
The sooner more people become familiar with Shank’s pony the better.
At least cash is reliable:
https://www.theguardian.com/australia-news/2024/feb/15/at-least-six-australian-banks-hit-by-network-outages-including-ubank-and-bank-australia
Sense of proportion: when power’s out you can’t make a decent latte. Not being able to pay for it is a second order problem.
Don’t need a power outage – an Optus outage would suffice – luckily that will never happen.
Last year a couple of fellow aqua pool users and I fought the same fight against being forced to use a card to pay for parking in the lot outside our pool. One of us drafted the relevant federal legislation and was very firm that the lot managers were obliged to accept cash as it was legal tender. We won in the end- after saving ourselves a lot of parking fees as we held out for ages.
I object strongly to parking lots who need my personal data such as date of birth, email and home addresses. As someone whose data was severely compromised by Medibank Private and Latitude (I do not recall ever dealing with Latitude and presume they bought my data from someone else) I know that companies are very lax in their security (though very strong on non-apology apologies while Medibank keeps hiking its premiums).
I agree with Katter – unusually. And with two sisters living in South Gippsland and still without power after Tuesday’s enormous storm I keep being aware of more reasons to stick with cash.
Why would a parking lot need any of your personal data just to pay with a card ?
Because you need to register with the company that controls the parking meters.
The parking meter doesn’t just have an integrated EFTPOS terminal ?
Yet another reason to prefer cash for parking:
https://www.theguardian.com/technology/2023/dec/26/hackers-steal-customer-data-europe-parking-app-easypark-ringgo-parkmobile?&web_view=true
It got Knutter some media attention, so it was a worthwhile exercise for Australia in his opinion.
One suspects it’s a confected stunt inspired by and linked to Farage’s supposed ‘debanking’ non issue in the UK that segued to RW MSM scare campaigns on cash, to claim one is victimised for being old……
De-banking is a proper issue for some people in Australia.
People with mental health conditions will often be debanked due to challenges with communication (if they’re even allowed to open an account in the first place, which is not a sure thing),
homeless people (especially those with mental health conditions) also,
and then as Farage points out – people who may put the bank in to disrepute. This is generally not a concern for people like Farage, though people that work in industries that the bank doesn’t approve of are a target of debanking. In particular sex workers struggle to maintain bank accounts due to debanking.
I said a bad word which is waiting for mod-bot approval.
De-banking is a proper issue for some people in Australia.
People with mental health conditions will often be debanked due to challenges with communication (if they’re even allowed to open an account in the first place, which is not a sure thing),
homeless people (especially those with mental health conditions) also,
and then as Farage points out – people who may put the bank in to disrepute. This is generally not a concern for people like Farage, though people that work in industries that the bank doesn’t approve of are a target of debanking. In particular adult industry workers struggle to maintain bank accounts due to debanking.
I object to banks taking a cut with every transaction I make, but it seems to be a losing battle.
The Optus outage comes to mind.
And the ridiculous comment by the CEO about the barber who lost business.
When she was speaking to reporters about the outage, and Barbers, Rosmarin said she was “disappointed” the barbershops could not trade.
Cutting hair “seems like one of the few things you can do without connectivity,” Rosmarin said. Which is true, if you don’t mind not getting paid for cutting the hair.
I’ve been to a cafe when they had an outage on their eftpos. Fortunately my friend and I had cash on us. I certainly couldn’t pay cash for my groceries because I don’t usually carry that much on me. And I’m not sure many of the charity stores like Vinnies and Salvos would get many paying with cards, especially for something that might only be $2.
Cash isn’t dead yet, we shouldn’t treat it like it is and since it still seems we don’t have a securely reliable electricity or digital network system, sometimes it might be wise to have a fall back system such as cash.
Can we spare a thought for Kelly Bayer Rosmarin? How is the poor soul getting along without the massive pay she was on. Has she been seen in a Centrelink queue?