For many of us used to swiping our cards or pressing cards against a tap & go terminal for every transaction, the annoyance of encountering restaurants, bars, and coffee shops with a cash-only register is an intense frustration. Is our increasing reliance on electronic payment bringing about the end of the cash-only business? Is the small business that operates cash only doing itself a disservice?
A key consideration is that consumers paying by card spend more money.

Customers with cash in their hand are reluctant to spend it. Cash in a customers hands provides a tangible representation of how much money they actually have. A card, however, is theoretical and represents less risk to actually spend it. It is only natural that consumers spend more by card. A well-known study conducted by Dun & Bradstreet found that people spent an additional 12-18% when using credit cards than when using cash, with McDonalds reporting a sales increase from $4.50 to $7 from those using cards.

If the sales increase from accepting card payments isn’t reason enough to ensure your small business accepts electronic payments, business owners need to also realise that customers are developing an increasing reliance on card payment systems. Banks and credit card companies in Australia have been making considerable efforts to make point of sale EFT terminals as frictionless as possible and, consequently, even more enticing to paying customers.

From 1 August 2014, Australian retailers have been required to only accept PIN authorisations on payments after signature authorisations were phased out. While the core objective of this was to increase security, it has the added effect of improving the speed and fluidity of transactions. Similarly, the introduction of contactless payment systems like PayWave and PayPass with their tap & go functionality have further made point of sale transactions extremely fast and easy. It makes the use of these systems far more attractive to consumers.

A further technological shift in making our payments even more frictionless is expected to continue with companies like Apple and Google introducing their own payment platforms utilising consumers smart phones and wearables like watches to conduct transactions. Apple Pay and Google Wallet aren’t yet available in Australia, but their introduction is inevitable.

Technology trends indicate that the use of cash is on the decline. In 2014, the RBA released their report “The Changing Way We Pay: Trends in Consumer Payments“. Their research found that there was an increasing use of credit and debit cards for payment.


PAYMENT INSTRUCTION (Per Week) 2007 2010 2013
Total 12.7 15.6 13.0
Cash 8.6 9.5 6.1
Cards 3.3 4.8 5.5
Debit Cards 1.8 3.4 3.1
Credit and Charge Cards 1.4 1.4 2.4


The Australian Payments Clearing Association (APCA) report that 54% of Australians in 2014 had a card capable of contactless payments, with 320,000 contactless payment terminals across Australia. APCA’s further noted that cash as a share of total payments volume dropped from 73% in 2005 to 59% in 2013, with a further decline forecast to 43% in 2018. They were quick to note that Australia is not becoming a cash-less society, but rather were just embracing less-cash.

Despite the many compelling reasons to embrace card payments within a business, there are still many companies that are reluctant to shift from being a cash-only business. The reasons for this are varied, extending beyond the assumption many of us make, which is that a cash-only business owner is running their business that way to hide the truth about just how much money they’re making. Companies that do hide their profits often do it to avoid paying the correct amount of tax or superannuation. The ATO refer to this as the ‘the hidden economy’.

So why do some businesses only accept cash? Reasons include:

  • By only accepting cash, a business does not have to pay banks or credit card companies any transaction fees (which are generally between 1-3%).
  • Immediate funds. As soon as a transaction occurs, the company has the money. There is no waiting for electronic funds to be transferred.
  • Business owners don’t need to be concerned about electronic payment fraud, such as stolen credit cards. The primary financial responsibility for a fraudulent credit card transaction generally lies with the business, so in the event of credit card fraud a small business not only cops the expense of the transaction, but also the loss of the goods/services.

But are these reason enough to reduce the many benefits that come from accepting card payment? Beyond the gains from accepting cards, engaging in a cash-only business also brings with it some distinct disadvantages:

  • With consumers so used to purchasing goods via electronic payments, many people now carry less cash on them. When confronted with your cash-only business, they may be inclined to take their business elsewhere.
  • There is a security risk to keeping large sums of cash on the premises. Electronic payment reduces that concern.

Australians are generally quick to embrace new technology, and it is evident that electronic payment systems are an extension of that. With at least 43% of transactions expected to still be cash based in 2018, cash won’t be phased out tomorrow. But, more consumers are looking for the ability to pay by card and other electronic payment systems.

A business may be able to survive as a cash business, but they may well start losing customers as a result.