There are risks either way. If the purchase price is below your daily internet withdrawal limit then cash is less risky in some sense, plus with on the spot internet banking you may lose your mobile phone as well.
Even so, you meet in a reasonably crowded location - crowded enough so that there are many witnesses (and some potential defenders) but not so crowded that the perp can disappear too easily.
Commonsense says that at a certain price point, you wouldn’t pay cash, and you wouldn’t buy privately from a complete stranger (except for things like real estate and cars where there are at least some additional checks in the system).
Businesses don’t have to accept any amount of cash. We don’t accept cash payments for certain transactions (only credit card is accepted) and many real estate agents don’t accept cash. Saves time on cash handling / counting / banking too.
From the RBA: However although transactions are to be in Australian currency unless otherwise agreed or specified, and Australian currency has legal tender status, Australian banknotes and coins do not necessarily have to be used in transactions and refusal to accept payment in legal tender banknotes and coins is not unlawful.
Perhaps grahroll’s point is that … if the business and the customer agree to do the transaction in cash, the law will soon be preventing them from doing so. So this is about consenting adults, as it were.
In practice, just as I wouldn’t like to carry around $10k in cash, a business probably doesn’t want to hold $10k in cash until they get a chance to go to the bank.
As @person notes it is not about who has or doesn’t have to accept that amount or any amount of cash, it is about the ability to do so if the parties are in agreement to use it. Australia has become very cash adverse particularly in business, some for very good safety/security reasons. Some are adverse to it because it requires handling of cash and they just don’t want that hassle.
As an example of perhaps what may become an unintended (or maybe intended) consequence, if a person goes to a bank and withdraws $12,000 dollars to give to several of their childfren, friends or similar will the Bank then refuse to do so because it exceeds $10,000. Will the Bank be required to find out who is to receive the cash? Currently Austrac will be informed of the withdrawal and they can query the transaction if need be by having someone contact the withdrawer or starting an investigation into the transaction. They certainly don’t always do this and this will not change. If the Law changes it may become a situation where an innocent party will become almost guiltty by the fact they have withdrawn a large sum of cash. Say they want to put it under their mattress, or to anonymously donate, or to share or really an other lawful reason they may have to do what they wish with their money, why should they be presumed to have a guilty purpose behind that withdrawal.
If the Law is passed then the limits may become very flexible eg the limit could be dropped from $10,000 down to much less. Who knows how involved Govt will want to become in every micro transaction you undertake each day (by micro I just mean the small shops some do every day eg to buy a loaf of bread). Some will perhaps say they won’t or don’t want to do this. That may be so but if it is so we may regret the changes we may accept now and will have changed on us later. Does anyone really know what brakes will be put on whether it just needs “Executive” approval to change. We already have forms of “thought” legislation ie the intent or discussion of something bad is an offence for which you now have to prove innocence rather than the old principle of assumed innocent until found guilty. They call it necessary because of security threats, it removes protections that we had previously such as now they can hold you for extended periods of time without charge and without a requirement to address the harm done when you are innocent. How far may we go down the rabbit hole?
Which ironically is under the AEC (disclosure) reporting limit if they donated it to a political party.
Perhaps the $10k limit (for this and for AML/CTF) should be tied to the AEC donation reporting limit.
If a political party thinks that it is good enough that they can hide the source of a $14,000 donation, perhaps a business or an individual ought likewise be able to transact $14,000 anonymously in cash.
Another thought that came to me on this bill as customers will be locked in to card transactions for any large purchases over $9999.99 is that Banks and Businesses knowing they have a “cash captive” audience will likely put fees on those larger transactions ie increase the Bank Cheque fees or the often missing debit transaction fees will become very common place eg if your transaction exceeds $10,000 we will charge 1% for debit transactions. Where currently if that was the case the customer could just get cash and avoid any such fees. This would add to the profits of Banks/Financial Institutions and Businesses through these “hidden fees”.
In that light I think that because this cash limit will become law that legislation needs further tightening to limit this possible and most probable impost being levied. If a business doesn’t levy these fees now then they should be limited to any increase of fees they see as a potential “cash grab”.
Interestingly though, see my comment above about the “sole or dominant purpose” condition. Avoiding gouging might provide an excuse for criminals and others to conduct transactions that are over $10k as multiple cash transactions that are under $10k. As such therefore it would be in the government’s interest as well for the government to legislate to protect the consumer from such gouging.
The card provider may well impose the gouging on the merchant, not on the customer. However some merchants may pass that charge on to the customer - and the government encourages merchants to do so (so that the full cost of the choice of payment method is visible and effective as a price signal).
Economic efficiency however suggests that the card fee should reflect the true cost. Is there a disproportionate risk in high value transactions? If not then it should at most be a flat percentage. Can one even justify a flat percentage? Maybe. Maybe not. Perhaps a question for the Productivity Commission.
As far as I am aware, the fee for a Bank Cheque does not depend on the amount - and if the card fee is going to be 1% then a Bank Cheque would be much much cheaper for any amount that is really in consideration here. Bank Cheques are of course slower and less convenient.
Keep in mind that’s the law. It’s illegal for businesses to charge transaction fees above what it costs them to process. Europcar just got fined for that.
Doesn’t mean that they can’t change that fee structure. They would just need to say for Bank Cheques over $10K we charge X% of the value in fees just as they do with FX, or have some tiered fee structure.
I was just pointing out that currently that is a difference between card fee and bank cheque fee.
It would be hard for a bank to justify introducing a tiered structure or fixed percentage for bank cheques, because they are very low risk. That’s why they are used to buy real estate - and anyone buying real estate would be sh*tting bricks if the banks introduced a 1% fee on Bank Cheques.
I understand, but it isn’t impossible for it to change even 0.5% fee structure would be easy to argue as the Bank could say this was a cost they currently bear for you using your CC or Debit card to transact on your account ie transferring money from your account to their account so that they can create the Bank Cheque eg that 0.5% extra charge (the teller cost, the Cheque cost, the IT cost, the cost of moving the money, Stamp duty and I guess anything they could add as a cost of that transaction).
As it stands now a business can charge a fee even for a debit card (most don’t but some do). Cash is a disincentive to do so as currently the person can just go get the money and come back and pays sans fees, but remove that option and you could see all businesses then charge the fee.
That would be a classic “unintended consequence”. However as it stands today, the government is not proposing to remove the option of paying cash, unless the transaction exceeds $10,000. Will the government potentially squeeze that limit down in the future? Maybe. I wouldn’t put it past them. Inflation will in any case squeeze that limit down, albeit very slowly at the moment.
Or, more worryingly for the business, not come back. A business wants to convert a potential sale into an actual sale. Letting the customer out the door, without making the sale, is an opportunity for the customer to change their mind / buy somewhere else / buy something else.
This is true but it still could be leveraged by businesses and financial institutions to increase the cost of using amounts of $10K and above once you cannot take cash to pay the cost. If I go to the bank and ask for $11,000 out of my account they only ask if I want a cheque as a safety measure, but if I ask for it as cash they supply it. With these changes will the bank be asking more questions as to my intent?
Anyway regardless of the possible extra intrusion into my private affairs let us assume I want to buy a TV at JB HiFi. I currently have the choice to pop on down with the $11K cash or to pay with a CC or Debit card, once this legislation is in place both the bank and the business know I will be required to use a Cheque or a Card. At this point they have me captive to their terms of doing business (I can refuse to buy through them or to use their payment methods of course), and it will be more likely they will tack on the charges for doing so. Every financial institution and business will be in the exact same power position regarding adding the transaction cost to my purchase. Below that current $10K threshold I am guessing they won’t apply the extra cost as they will run the risk I will just turn up with or withdraw cash or go elsewhere where they don’t charge a transaction fee.
This above is all just a guess but as an example of wanting more out of customers, even for low income earners and welfare recipients once Centrelink stopped Cheque payments and you had to have an account the financial institutions quickly tacked on account charges as they had a captive populace. This in turn lead to disgruntlement and for some an extra financial burden. Some sense or legislation finally prevailed and most now offer fee free accounts if you deposit x amount per month or if you are a pensioner or concession card holder. Who is to say this won’t be reversed either at a whim.
Yes true however, as noted above, that could undermine the legislation.
If anything, the true percentage cost for a non-credit transaction should be lower for higher amounts i.e. there are fixed costs of conducting the transaction that don’t magically get higher just because the amount is higher. This is particularly true in the ranges above $10k i.e. because anything above $10k might automatically be reportable to AUSTRAC and hence incur that fixed cost regardless of the amount (but that cost does not apply below $10k).
That’s a good question. It is possible that today your cash withdrawal will be reported to AUSTRAC anyway. Is there any new obligation on the bank? I don’t know.
Would it be a courtesy by the bank to point out to you that you can’t legally use the $11k cash to buy any one thing from a business? Yes.
It makes a couple of good points that I don’t think have been made so far in this discussion.
As we move into an era of negative interest rates, people may be more inclined to hold cash. This bill is therefore divorced from the coming real world.
There is no defence available allowing you to show that your cash transaction was otherwise legal (e.g. not involving the purchase of illegal goods, not involving the use of proceeds of crime, and not involving tax evasion). So in essence there is no presumption of innocence. You are presumed unrebuttably to be a criminal merely by virtue of paying $10k in cash.
It is arguable that that is not ‘sense’. A bank is not a charity and it doesn’t cost nothing to provide a banking service.
There is no particular reason why a bank would sensibly not charge to provide a service. The effect could be that the bank is forcing fee-paying customers to subsidise those who don’t pay fees. However one needs to be careful with this argument because a) there are ways in which you pay for the account over and above explicit account fees e.g. via the interest rate or lack thereof, and b) in the current political climate, post-Royal Commission, a bank might view providing a free account as an investment in marketing.
That kind of subsidy would more usually be the role of government (i.e. to make that coercion via the tax system).
However clearly there is a lot of opinion and a lot of ideology involved in this particular side-discussion.
I got around to looking at the actual exposure draft legislation. Some additional observations:
The legislation does not itself exclude individuals. So if you pay your grandmother $11,000 cash for her old clunker, that is within the scope of the legislation. You and grandma are going to jail. It is however currently excluded by legislative instrument from the Minister as one of the allowable exceptions.
The legislation does not exempt multiple cash payments which individually are below $10,000 but which together exceed $10,000 i.e. there is no “sole or dominant purpose” test. This impacts on various discussions in previous posts.
The legislation excludes digital currency transactions, if I am reading it right, but this is only currently excluded by legislative instrument from the Minister, as in item 1 above.
It is however currently excluded by legislative instrument from the Minister as one of the allowable exceptions.
