Bob Katter says it’s illegal for Australian businesses to refuse his $50. That’s false

What was claimed

It is illegal for Australian businesses to refuse cash payments.

Our verdict

False. Businesses can choose which payment types they accept.

Federal MP Bob Katter reckons a cafe in Parliament House acted illegally by refusing to accept cash to pay for a meal, but his claim is fishy.

The outspoken member for Kennedy says the eatery broke the law when initially knocking back his $50 note as payment for a plate of fish and vegetables. However, Katter’s assertion businesses are legally obligated to take cash is false.

The Reserve Bank of Australia (RBA) and Australian Competition and Consumer Commission (ACCC) say businesses can choose which payment types they accept, so long as they make buyers aware of payment terms before purchase.

The dispute over the legality of cash was sparked when Katter tried to buy a meal at a parliamentary cafe on February 6, but reportedly had a $50 note turned down by the cashier.

Speaking to Sky News Australia the following day, the MP said he told the cashier not accepting cash was illegal.

“She (the staff member) said, ‘We don’t accept cash,’ and I said, ‘Well, too bad for you, you have to. It’s legal tender and it’s illegal for you not to take cash,'” Katter said in the interview.

“I said, ‘No, no, no, I will stand here and you’ll accept this legal tender. If you don’t you’re breaking the law’,” Katter said.

“So the manager came down, and he ran off and came back and said, ‘Yeah it is the law, we do have to accept cash.'”

The Far North Queensland politician’s comments were reported by various media outlets including The Sydney Morning Herald, news.com.au and The New Daily.

Despite Katter’s insistence the cafe was obligated to accept cash, no such law exists. It is true Australian banknotes are legal tender, as stated in section 36(1) of the Reserve Bank Act 1959, but that does not mean a business has to automatically accept cash as payment.

The RBA says a business can set the terms of payment before entering into a “contract” to supply the goods or services.

“For example, some vending machines, parking meters and road toll collection points indicate by signs that they will not accept low denomination coins. Some road toll collection points indicate that they will not accept any cash at all,” the RBA website states.

“If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment.”

The ACCC, Australia’s consumer market regulator, provides similar information about cash payments.

“Businesses don’t have to accept cash,” the ACCC website states.

“Businesses can choose which payment types they accept … This includes whether they will accept cash payment. However, consumers must be made aware of these terms and conditions before they make a purchase.”

Two consumer law academics told AAP FactCheck that Katter was misguided in thinking the parliamentary cafe was legally obliged to accept cash.

“Businesses can choose whether or not to accept cash. It is not illegal to refuse to accept cash,” said Jeannie Paterson, a law professor at the University of Melbourne.

“There may be reason for preserving cash and for encouraging businesses to accept cash. But it’s not the law.”

Paterson said the fact cash was legal tender meant it cannot be rejected as a way of paying an already incurred debt.

Justin Malbon, an adjunct professor at Griffith University’s law school, agreed there was no law in Australia forcing businesses to accept cash.

In Katter’s case, the fish dinner dispute would more likely be a matter of contract law, he told AAP FactCheck.

“If so, Katter would have to sue the retailer for breach of contract in a court or tribunal,” Malbon said in an email.

“He would have to point to some implied contract term in which the business agreed to accept cash, unless it said otherwise (e.g. by a ‘We don’t accept cash’) sign.”

If the cafe didn’t have a sign indicating it did not accept cash, and a court or tribunal also found there was a contractual obligation to accept cash, that could be a breach of contract, he said.

If so, the court or tribunal could order the cafe to pay Katter compensation for any “loss” incurred in not being able to buy his plate of food, Malbon said.

Malbon was doubtful a court would find the cafe was obligated to accept cash. And even if it did, Malbon said breaching a contract was generally not illegal.

“If I breach a contract, I don’t breach the law. I simply breach a contract, which is not the same thing,” he said.

“So bottom line, Katter says non-acceptance of his offer to pay in cash is ‘illegal’. He needs to tell us what law has been breached.”

Katter’s office did not respond to questions from AAP FactCheck about which laws the cafe allegedly breached.

AAP FactCheck has previously debunked claims customers can take goods for free if businesses refuse cash.

The verdict

The claim that it is illegal for Australian businesses to refuse cash payments is false. There is no law in Australia that forces businesses to take cash payments. The Reserve Bank and ACCC both say businesses can choose which payment types they accept, but must be upfront about their payment terms before purchase.

False. The claim is inaccurate.