From the corner shop to your local dry cleaners or restaurant, the overwhelming reason for running a cash only business is to avoid the Australian Tax Office, says the head of the Australian Retailers Association, Russell Zimmerman.

While there are exceptions to the rule, Zimmerman says the low cost of accepting even sub-$10 transactions, meant the 140,000 retail outlets across Australia had to ensure they utilised every tool available to finalise a sale in their stores.

While there is no official data on the number of cash absent Australians, research in the United States by Bankrate found 40% of Americans carry less than $US20 cash.

Cash product of last resort

And research by Visa determined: “Just as 2014 was the year contactless payments reached mass adoption in Australia, with over 75 million Visa transactions taking place on tap and go each month, 2015 is poised to be the tipping point for mobile payments,” said group country manager Stephen Karpin.

Additional research by UMR Strategic found seven in 10 Australians have a smart phone, and 53 percent of those owners were interested in using their phones for payments.

It all adds up to yet another tipping point – if you discount legal obligations, when does avoiding tax become more of a liability than turning away customers?

The evidence suggests it’s rapidly approaching, if not already here.

Zimmerman says cash only businesses are pre-dominantly caf├ęs and restaurants, and that the issue is worse in regional areas.

Cash links to business failure

And he said if customers are going up the road to a competitor, then increasingly business failure in cash only businesses, may be attributed to a lack of options presented to consumers.

The use of non-cash methods for payments has also been shown by numerous research to encourage people to spend more. Visa reports the average cash spend is $17, $66 for credit cards, and $42 for debit cards. The latter is particularly interesting, as the increasing use of debit cards negates the threat some people have of building up debt on cards.

An example of a business moving away from cash is Cannings Butchers, a chain of three stores in Melbourne, which no longer accepts cash as payment.

With butchers constantly handling fresh meat, the shop operators found it unproductive, and potentially unhygienic, to have to constantly take gloves on and off to handle notes and coins.

The shift earned it the MasterCard Australian Retail Payments Leader of the Year award at the 2015 eftpos ARA Australian Retail Awards.

Zimmerman said increasingly retailers were contacting the association to check on the legality of going cashless, prompting Zimmerman to confirm with the Reserve Bank of Australia that retailers have a choice on whether or not to accept cash.

Pro cash crowd on the fringe

And certainly using cost as a factor for a cash only business is a misnomer, says Zimmerman.  Some shop owners cite point of sale (POS) terminal hire costs as too much, but even a street stall vendor can get an mPOS app on their mobile or tablet, buy an adapter to accept swipe cards and insert chips, and be set to accept nearly any form of payment.

As cash only businesses decline the remainder may also become more visible to interested parties. The ATO receives 60,000 tip-offs a year on tax evasion from the public. A local shop may find more residents prepared to contact the ATO, if a growing number of customers become annoyed at having to use cash they no longer carry.

This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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