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Australia’s Labor government has  that it plans to mandate cash acceptance for purchases of essential items such as food, fuel and medicine.

The Treasury plans to open a consultation by the end of 2024 on which businesses supplying essential goods should be covered by the mandate.

The consultation will consider the needs of those who rely on cash, including people in regional areas and those unable to use digital payments, as well as the impact on businesses.

The Treasury noted that small businesses, which could be significantly affected, will be given “appropriate exemptions”.

The consultation will also cover what further steps are required to ensure the long-term and sustainable distribution of cash to enable adequate access.

The final details of the mandate will be announced in 2025, and the mandate would commence from January 1, 2026.

Australian Treasurer Jim Chalmers, announcing the plans on Monday (November 18), said that although most payments are now made digitally, there is still a “place for cash” in Australia’s economy.

“Mandating cash for essential purchases, such as groceries and fuel, means those who rely on cash will not be left behind,” he said. “For many Australians, cash is more than a payment method: it’s a lifeline.”

According to a  from the Reserve Bank of Australia (RBA), 1.5m Australians use cash to make more than 80 percent of their in‑person payments, and 94 percent of businesses continue to accept cash.

“Cash also provides an easily accessible back‑up to digital payments in times of natural disaster or digital outage,” Chalmers added.

Cash Welcome takes credit for policy shift

The Treasury’s plans appear to adopt the demands of a  circulated by Cash Welcome, a campaign group created by Australian journalist Jason Bryce.

Since March 2023, Cash Welcome has been petitioning the government to mandate cash acceptance for purchases of food and other essentials, and to ensure “reasonable” local access to cash and in-person banking services.

On the eve of Chalmers’ announcement, the petition had reached almost 200,000 signatures.

Bryce said the government’s commitment to protecting cash is the result of strong grassroots opposition to the idea of a “cashless society”.

“The Albanese government has heard the public's voice and moved to protect the cash economy and regional banking services,” he said.

“Using social media, mainstream media news and engaging with regulators and government, we have shown how large policy public outcomes can be achieved by working together.”

Rural bank levy incoming

Bryce also noted that the Treasury is set to introduce a new rural bank levy alongside the cash acceptance mandate.

The levy will be applied so that banks that close their branches in rural areas will be made to support those that keep them open.

The plans, which have not yet been announced publicly, but have been leaked to the media, follow a Treasury report and a Senate investigation into rural bank closures.

In 2022, the Treasury’s Regional Banking Taskforce published a  highlighting that trends in bank branch closures were contributing to severe financial exclusion risks in rural areas.

The report drew on submissions from banks, consumer groups, farmers, small businesses and local government agencies.

The importance of banking services and access to cash for regional communities was a major theme of the report, especially in the context of emergencies.

As one submission noted: “When the system goes down without a bank branch or an ATM in your town, how do you access your cash savings in an emergency?

“You could not get fuel for your car or food for the family to eat. It was a terrible time for all of us.”

A subsequent Senate inquiry, published in May,  that the government adopt a policy recognising access to financial services as an essential service.

“To this end, it should commit to guaranteeing reasonable access to cash and financial services for all Australians,” it said.

The Senate committee that authored the report also suggested the government should investigate the feasibility of establishing a publicly-owned bank in order to guarantee these services.

Similarities with Armaguard cost-sharing arrangement

The rural bank levy will create a cost-sharing arrangement similar to the cash-in-transit deal  by the Australian Banking Association (ABA) in June this year.

������covered by ���ĺ�������, the deal will see major banks and retailers making a 12-month financial contribution of $A50m ($32m) to ensure that Armaguard’s cash-in-transit business continues to operate.

The assistance is subject to meeting monthly key performance indicators and other conditions.

It also includes a commitment by the parties to work together to develop an independent pricing mechanism to support a sustainable cash delivery business in the longer term.