Consumer Watch with Cheryle Dennis: What to know about the types of payments businesses can accept

“Businesses have to accept legal tender.”

It’s a comment we hear a lot at Consumer Protection, so I wanted to take the opportunity to clear this up and let you know what the law says about it.

Businesses can choose which payment types they accept. It is legal for a business to specify the terms and conditions under which they will supply goods and services. This includes whether they will accept cash payment.

However, you must be made aware of these terms and conditions before you make a purchase. This could be a clear sign at the register or door stating the business does not accept cash, or the staff verbally informing you that you can’t pay with cash.

We know a lot of people like to pay with cash to avoid credit-card surcharges. The good news is there are rules about this too. Card surcharges are permitted under the Australian Consumer Law, however the fee must only reflect what it actually costs the business to process the payment, such as bank fees or terminal costs. If a business charges a payment surcharge, it must be able to prove the costs it is based on.

If there is no other way for you to pay without incurring a surcharge, then the business must include the fee in the total cost. For example, your local cafe charges $5 for a coffee, but it does not accept cash, and all card payments are surcharged. Then it is not possible for you to buy that coffee at $5. If the surcharge is 1% then the price displayed must clearly be $5.05 so you can easily tell how much your coffee really costs.

While the costs associated with taking card payments is obvious, there are also costs for dealing in cash. Handling cash costs businesses in time and wages.

Remember, purchasing goods or services is entering into an agreement with a seller. You do not have to agree to make the purchase if the payment methods aren’t acceptable to you. But it is legal for the business to refuse to accept cash so long as they have made this clear.

If you believe a business is breaching the rules, it’s best to broach it with them first. Should negotiations fail, contact Consumer Protection on 1300 30 40 54, or consumer@dmirs.wa.gov.au.

Cheryle Dennis is acting senior regional officer for Consumer Protection in the Mid West