Phasing Out Cheques: What You Need to Know

The Australian Government has announced a transition plan to phase out the use of cheques, marking a significant step toward modernising payment systems. Here’s what the timeline looks like and what it means for businesses and individuals.

The Transition Timeline

Under the Government’s plan:

• 30 June 2028: Cheques will no longer be issued.
• 30 September 2029: Cheques will no longer be accepted as a payment method.

This decision reflects a dramatic decline in cheque usage over the past decade, with cheque transactions decreasing by approximately 90%. Many banks have already ceased issuing chequebooks to new customers, though financial institutions are currently required by law to accept cheques until the Government formally removes this obligation.

Globally, Australia is not alone in this shift. Danish banks stopped accepting cheques in 2017, and New Zealand followed suit in 2021.

Cheques Out, but Cash Still Matters

While digital payments have largely replaced cheques, the Australian Government recognises the ongoing importance of cash in the economy:

• Around 1.5 million Australians rely on cash for more than 80% of their in-person payments.
• Cash serves as a vital backup during natural disasters or digital payment outages.

To ensure accessibility, the Government has committed to mandating that businesses selling essential items must continue to accept cash. However, there will be exemptions for small businesses where this may be impractical.

Current Rules for Cash Payments

At present, businesses in Australia are not required to accept cash. They are free to set terms and conditions for how they supply goods and services, including payment methods.

Despite this, up to 94% of businesses continue to accept cash, highlighting its enduring relevance. The Government’s future mandate will formalise cash acceptance for essential items, preserving choice and accessibility for consumers.

Card Payments and Surcharges

With the shift toward digital payments, the topic of card surcharges often arises. Businesses are allowed to charge a surcharge for card transactions, but this charge:

• Must reflect actual costs: Businesses can only pass on what it costs them to process the payment.
• Cannot exceed those costs: Excessive surcharges are prohibited under Australian law.

For businesses, incorporating payment processing costs into overall pricing remains an option to avoid applying surcharges directly.

What This Means for You

The phasing out of cheques signifies a continued evolution in how Australians manage payments. For individuals and businesses, adapting to digital payment systems will be key, while cash remains an important safety net.

If you’re unsure about how these changes could affect your financial or business operations, Modoras is here to help.

Contact us today to ensure your payment systems are ready for the future.