March 20, 2020 08:26:06
The coronavirus pandemic has spread to many aspects of life.
But one of its early and unexpected impacts seems to be on cash — or, more specifically, cash transactions.
Businesses are trying to protect their staff by preventing them from handling notes and coinsCash is ‘legal tender’, but sellers are not breaking the law by refusing to accept itThe Reserve Bank says cash transactions are at historic lows, though many people like ‘hoarding’ it for emergencies
Though it does not reference cash specifically, Department of Health advice says the COVID-19 virus can spread through “touching objects that have cough or sneeze droplets from an infected person” on them.
So when managers of The Knox cafe, in suburban Canberra, met to discuss how to protect staff and improve hygiene, refusing coins and banknotes was one of their first decisions.
“We’ve stopped using keep cups and we’ve stopped cash transactions,” front-of-house manager Madeleine Clarke said.
“Our boss wants us to minimise hand-to-hand interactions and, obviously, cash carries a lot of germs.”
Peter Barclay, who runs Canberra City pub King O’Malleys, has started to ask drinkers to do the same.
“Already, very few people use cash in the economy … it’s probably 10 to 15 per cent of our patrons,” he said.
“When they come to the bar, we just say, ‘Look, do you have a credit card?'”
These cases are not isolated.
Merchants across the country are responding to the COVID-19 crisis by avoiding touching money.
Others, such as McDonald’s restaurants, still accept coins and banknotes, but instruct staff to wear gloves while doing so.
A spokesperson for McDonald’s said the chain had also advised employees how to give and take coins from customers in a way that minimised contact.
The NSW Government has also recently reminded businesses of the dangers of handling cash and, if it was required, suggested they use hand sanitisers.
Is it unlawful to refuse to accept cash?
There is a widespread belief that if you give a business “legal tender” — official Australian coins or banknotes — they must accept it as payment.
However, that is not what the law says. In fact, the Currency Act limits the buyer’s rights to use physical money in certain situations.
For example, if you use silver coins (5c, 10c, 20c or 50c pieces) for a purchase worth more than $5, the seller can say no. Similarly, $2 coins only give you the right to buy a $20 good or service.
It is also legal for vending machines and parking meters to accept only certain denominations of currency.
The Reserve Bank of Australia says sellers are “at liberty to set the commercial terms upon which payment will take place” before the purchase “and refusal to accept payment in legal tender banknotes and coins is not unlawful”.
A sign at a cafe counter does just that — it lays out the commercial terms before the customer orders.
The exception is when a purchase was agreed without first settling on how the payment would be made.
“Refusal to accept legal tender in payment of an existing debt, where no other means of payment/settlement has been specified in advance, conceivably could have consequences in legal proceedings,” the Reserve Bank said.
Cash transactions were already declining
Concerns about coronavirus may be stymying cash transactions, but the use of notes and coins has been in decline for years.
Global firm Research and Markets predicted last year that Australia could become the Asia-Pacific’s “first cashless society” by 2022.
The Commonwealth Bank offered a more cautious forecast, saying that was likelier to happen by 2026.
Consumer payments methods survey
Yesterday, the Reserve Bank published its latest survey of how consumers pay for goods and services.
They found only one in four transactions last year were in cash; 13 years ago it was the opposite, with a quarter of our purchases made with cards.
However, the Reserve noted there were two main exceptions to this rapid switch in habits: poorer Australians and older Australians.
While people aged 65 and over used cash less often than they once did, they still used notes and coins for more than half of their payments.
“It will be important to consider the needs of people who prefer to pay in cash or continue to write cheques, and/or who do not have access to electronic payment options in the broader transition to electronic payments,” the bank’s report said.
What the experts are saying about coronavirus:
‘Hoarders’ still want banknotes
Yet while fewer Australians than ever are using cash, some of us still want it — and large amounts of it — for a range of reasons.
The value of Australian currency in circulation has actually been trending upwards in recent years, almost all of it $50 and $100 bills.
Face value of Australian banknotes in circulation
In a paper published last year, two Reserve Bank staff analysed where the banknotes were and what they were used for.
They estimated that about half to three-quarters of the cash was essentially “hoarded” — both in Australia and overseas — as either savings or for emergency use.
About 15-35 per cent was used for “legitimate transactions”, while the rest was either lost or used in the black economy.
So while coronavirus may be making us loathe to actually touch cash, it will be many years, if ever, before Australia’s banknotes are killed off.
March 20, 2020 07:11:43