A Melbourne cafe owner has banned the use of cash on his premises, which has raised questions about what constitutes legal tender and whether cash can legally be avoided in business.
The shift away from cash seems only natural, given the convenience of card payments. In 2016, the Reserve Bank of Australia (RBA) tracked the spending habits of 1,500 participants for a full week, and concluded that card payments accounted for 52 per cent of all transactions made, while cash made up just 37 per cent.
However, chef Matt Wilkinson, who owns and operates Melbourne Pope Joan, has taken matters further, publicly declaring that his cafe will effectively ban cash in response to a series of burglaries.
“I just don’t want to keep getting broken into,” Matt recently told The Sydney Morning Herald.
“Any regulars can set up an account if they’ve got a problem … There will be a glass jar and you’ve got to have correct change and if you don’t, nearest to it, because there will be no change.”
Consumers and business owners alike have raised the question of whether completely removing cash is even legal, since it forms legal tender in Australia.
Somewhat surprisingly, however, the RBA states that “refusal to accept payment in legal tender banknotes and coins is not unlawful.”
To avoid disputes on the matter, businesses that ban or frown upon the use of cash are urged to make this known prior to that transaction taking place.
Refusal to accept cash as a means of settling outstanding debts is also likely to cause problems in any legal proceedings against debtors.
Businesses that do accept cash, though, are legally entitled to refuse payment using an excessive amount of coins.
According to the RBA, coins are only considered legal tender where they do not exceed:
- 10 times the face value of gold coins
- $5 where combinations of silver coins are used
- 20 centres where 1 and 2-cent coins are used
The latter is most significant, as despite being withdrawn from circulation, these coins still form legal tender.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
Ask the Experts: Does automation stack up financially?
By Christopher Overton
Opinion: How bad do things have to get?!
By Adam Zuchetti
Business lessons from the All Blacks
By Steve Stanley