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Surcharge for using cash in Australia: Expert’s alarming claim and RBA governor’s candid take

We are already paying the cost of convenience with digital payments, but is it fair for consumers to take a financial hit for using cash?

Australia may be moving towards a cashless society, but there’s no indication from the government or the big banks they’d completely ditch physical currency. This could mean a reality where Aussies will cop a surcharge for using cash, something even the governor of the Reserve Bank of Australia (RBA) can't deny.

Australians are believed to be burning almost a billion dollars a year on surcharges for using digital payments like Apple Pay or tapping with a card. But financial expert Scott Pape said it won’t stop there as the cost of transporting and banking cash continues to rise.

“While I don’t see an end for cash, I do see a future where there is a surcharge on paying with cash,” the Barefoot Investor author wrote.

Michele Bullock greyed out in a stylistic inset over an image from a $100 note.
Reserve Bank governor Michele Bullock has addressed the toll the rising expense of cash is having on businesses, so does this mean we could cop surcharges for using it? (Belinda Grant-Geary/Getty)

“It’s always puzzled me why paying for something with cash doesn’t carry a surcharge like cards do.


"After all, there’s a huge cost to taking cash. Think of the shopkeepers who have to walk to a bank holding more money than a homie in a rap video. Or Armaguard, who have two pistol-packing blokes driving around in an armoured tank.”


Cost of moving cash rising so who will carry the burden?

Pape was responding to a question from a reader who expressed concerns about coins being removed and replaced with notes, as they are heavier and more cumbersome to move around the country.

There’s no denying cash is expensive to handle. Australia Post has complained about transporting it “on our dime” and no wonder, just supporting Coober Pedy costs $4,000 a week, or $208,000 a year.

For major banks, that figure blows out to approximately $400 million for the Commonwealth Bank.

The big four have all been under fire for closing branches and ATMs, but CBA chief Matt Comyn made a good point when addressing a senate inquiry.

“Many of our customers don’t use cash though, and these customers cross-subsidise those that do,” he said.

CommBank more than tripled a fee for small business owners depositing cash last year.

Richard Holden, Professor of Economics at UNSW Business School said Australia told Yahoo Finance using cash from a “system perspective is costly and a hassle”.

“If you run a café, 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,” he said.

What does the Reserve Bank think about charging to use cash?

The RBA said there were no plans to replace coins with notes.

But Governor Michele Bullock has noted the cost of providing cash services is rising and questioned whether businesses would continue to absorb these costs.

She said it would be a “very big challenge” to get Australians to truly face the cost of using cash.

"I think the challenge with cash is that it really does have a big community, public service sort of aura attached to it. If you try to charge people to use cash, they are prepared to pay to get it out of an ATM but if businesses started charging people to use cash, I suspect there would be a very big backlash,” she said in December.

"Having said that, it is also true that as economists, you want people to face the prices of using particular services that reflect the cost of those services.

"So, at the moment I think we're probably in a position where it's very difficult to actually enforce payment for cash.”

Bullock said it’s more likely costs will remain hidden in the back-end processing fees of using cash.