Understanding the Australian Government’s plan for cash and cheques
As digital payments become increasingly prevalent, the Federal Government has announced it’s taking significant steps to modernise the nation's payment system while working to ensure that no one’s left behind. This involves maintaining the use of cash for essential transactions and phasing out cheques in a gradual manner. The government says it intends to consult extensively with stakeholders, including small businesses and people in regional communities, to develop a cash mandate that’s both practical and inclusive.
Despite the rapid adoption of digital payment methods, cash remains an essential part of the Australian economy. For many Australians, cash is more than just a payment method; it's a lifeline. Approximately 1.5 million Australians rely on cash for over 80% of their in-person transactions. The government's plan to mandate cash acceptance for essential goods and services such as groceries and fuel ensures that these individuals can continue to participate fully in the economy.
The decision to mandate cash acceptance isn’t unique to Australia. Countries like Spain, France and several US states have implemented similar policies to ensure that cash remains a viable payment option.
The use of cheques has seen a dramatic decline, with a 90% reduction over the past decade. As digital payment options become more accessible and preferred, the government has set a timeline to phase out cheques entirely by 2029. Cheques will no longer be issued after June 2028 and will cease to be accepted by September 2029.
This transition plan is designed to be orderly and considerate of those who still rely on cheques, such as older Australians, people in regional communities and specific organisations like charities. The government expects banks to play a crucial role in supporting these users by facilitating a smooth transition to alternative payment methods. This collaborative approach aims to ensure that financial inclusion remains a priority throughout the transition period.
Modernising Australia’s payment infrastructure
Central to the government's strategy is the modernisation of Australia’s payment infrastructure. This involves transitioning from legacy systems like the Bulk Electronic Clearing System (BECS) to more advanced platforms such as the New Payments Platform (NPP). The NPP offers numerous advantages, including faster, 24/7 payment processing and enhanced security features like PayID, which allows users to confirm payee details before completing a transaction.
The shift from BECS to the NPP is part of a broader effort to create a more efficient, secure and inclusive payment system. This transition presents both opportunities and challenges, particularly for businesses and government agencies that rely heavily on BECS for bulk payments. The government is working closely with industry stakeholders to ensure a seamless transition, with a focus on minimising costs and disruptions.
The government's commitment to modernising the payment infrastructure aligns with global trends towards digitisation. Countries around the world are moving towards more efficient, low-cost digital payment systems, and Australia is well-positioned to lead in this space. The focus is on creating a payment system that offers greater choice, promotes financial inclusion, and ensures that all Australians can engage with the economy on their terms.
Ensuring continued access to cash
While digital payments are on the rise, cash remains a vital payment method for certain groups, particularly people in regional and remote areas. The government says it’s committed to ensuring that Australians continue to have access to cash as long as they need it. This involves working with industry partners to maintain a sustainable cash distribution network, even as the demand for cash declines.
What this means for you
For individuals who prefer cash or still use cheques, these changes may seem worrying. However, the government says its approach is designed to ensure that everyone can continue to participate fully in the economy, regardless of their preferred payment method. By mandating cash acceptance for essential purchases and providing a long lead time for the phase-out of cheques, the government is taking steps to ensure a smooth transition.
The consultation process offers an opportunity for people and businesses to voice any concerns and help shape the future of Australia’s payments system. Whether you're concerned about privacy and digital security, or simply prefer traditional payment methods, staying informed and engaged is crucial as these changes unfold.
Source: https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/ensuring-future-cash-and-next-steps-phasing-out-cheques
The Treasury - Australia's Cheques Transition Plan
The Treasury - A Strategic Plan for Australia's Payments System