Yahoo Finance Commonwealth Bank ups fees for depositing cash
The bank has come under fire for more than tripling a fee for small business owners depositing cash.
Commonwealth Bank (CBA) is hiking fees for small business owners depositing money into their account as its CEO reveals supporting cash transactions costs $400 million a year.
Business Transaction Account holders received a letter advising a $3 charge for depositing quick cash bags would increase to $10 from October 1.
Being assisted by a staff member to deposit or withdraw cash and cheques will also cost customers $5 instead of $3, and that includes if you are at a branch, a post office or over the phone if you speak to an operator.
“We know some of your customers will always prefer paying in cash and we’ll continue to support you with those services,” a letter sighted by Yahoo Finance reads.
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“Our branch staff are very happy to show you how to use our deposit ATMs.”
Cash advocates, such as Jason Bryce from the Cash Welcome campaign, have critcised the move.
"This fee is a heavy impost for the thousands of small businesses already dealing with tough economic times,” Bryce said.
"The majority of Australians want the right to use cash to pay for goods and services. Our banks need to support us to use our own money how we choose.”
Bryce has started a petition demanding a guarantee for banks to continue to support cash use. The petition has more than 126,000 signatures.
If customers pay a $10 monthly fee, 20 deposits were included. Now that's also being dropped to five.
"The cost of handling, processing and storing cash continues to increase," a CBA spokesperson told Yahoo Finance.
"While these changes may impact some of our customers, our preference is to work with our customers to help them avoid paying fees by taking advantage of self-service and digital payments."
Cash costing CBA $40 per customer
This comes as the bank’s chief executive, Matt Comyn, said running its 728 branches cost $1 billion a year, which was unsustainable, with the demand for transacting with cash dropping.
“Transporting and making cash available around our vast country involves the considerable expense of logistics and security,” Comyn told a senate inquiry hearing into the closure of regional banks.
“We estimate that continuing to support distribution and availability of cash costs CBA approximately $400 million each year, which works out to roughly $40 for every one of our 10 million customers. Many of our customers don’t use cash though, and these customers cross-subsidise those that do.”
He said 43 per cent of point-of-sale transactions were cash five years ago, but that figure had dropped to 15 per cent.
“Every week, customers transact more than $18 billion through the CommBank app — an increase of 64 per cent in just two years.”
The inquiry is examining the effect of more than 600 regional closures across Australia since 2017 and the impact it’s having on “vulnerable” country Australians.
All four major banks argue the vast majority of customers are using online banking, as cash transactions dramatically decline. But regional and rural communities across Australia have told the inquiry face-to-face banking is an essential service and part of their social fabric.
Debate is growing about Australia becoming a cashless society, however the Big Four have said they will not be following Macquarie Bank’s (MQG) lead and become cashless.
Will Australia become cashless?
There is about $10 billion in cash circulating in Australia right now, or around 2 billion notes.
ATM withdrawals dropped from 77.9 million in December 2008 to 29.7 million in June 2023, according to data from the Reserve Bank of Australia.
Richard Holden, Professor of Economics at UNSW Business School, told Yahoo Finance it would take government intervention to push Australia toward a cashless model, which would involve the commitment to phasing out notes in different increments.
“You could accelerate the process if the government said: ‘We are going to phase out the $100 bill by 2024, then the $50 note by 2025 and the $20 by 2026’,” Holden said.
“By giving a timeframe for the transition, people would have time to prepare.”
Even without that push, Holden said we’d be “functionally cashless” by the end of 2025 as people instead choose the convenience of digital transactions, whether that be with a card, phone or smart watches.
“Using cash from a system perspective is costly and a hassle,” Holden said.
“If you run a cafe, cash handling is a giant pain. You’ve got to have insurance, you've got to bundle it up at the end of the day and take it to a night safe. It takes staff time and it costs money.”
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