Is it legal to refuse legal tender?

Article published 6 June 2022

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AFTER reading our article on banks bullying customers on cheques, a reader emailed in with a question, saying that, of course, cheques were “a thing of the past” but cash wasn’t.

Their question was as follows:

DEFT payment systems (Macquarie Bank) have negotiated with Australia Post not to accept cash for payment of strata levies from 29 April 2022. They will accept cheque or debit card or by credit cards with a 1.5 to 3.5 per cent surcharge. Can you please advise if this allowable under Commonwealth law?

Cash as a method of payment is disappearing as fast as the cheque, much to the horror of money launderers everywhere. Cash is as old as civilisation and cheques date back to the Romans in the first (or last, depending on how you look at it) century before Christ.

According to a Reserve Bank survey in November 2019 cash was still used in 32 per cent of transactions. However, only 19 per cent of the total value of all transactions was in cash.

This means the number of cash transactions had fallen by a quarter in three years and the value of transactions by more than one-third.

At this rate, we can expect cash to effectively be non-existent by 2045.

However, this will probably happen a lot sooner because of the attrition among people who prefer to use cash.

Plus, money launderers will find ways to launder electronically. They already have, through cryptocurrencies.

We are witnessing a major change, the digital revolution, which is on par with the industrial revolution that swept the world 150 years ago.

But to get back to the question, can DEFT Payment Systems through Australia Post refuse payment in cash?

The answer is: yes.

Businesses can legally refuse to accept a consumer’s ‘legal tender’ (such as official Australian coins or banknotes) as payment. There is no law against a business refusing to accept cash for goods and services. Businesses are within their rights to set the commercial terms upon which payment will take place before the ‘contract’ for supply of goods or services is entered into.

Note that it can also work the other way around.

It’s perfectly legal for your local take-away shop to put up a hand-written sign which says: cash only, please!, meaning no cards and certainly no cheques.

Many still do.

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