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  • Australians tapped out when it comes to cash-only businesses

    New research shows that most Australians have negative views of cash-only businesses, with consumers describing them as ‘inconvenient’, and saying it makes them wonder if the business is honest.

    Detailed research by Colmar Brunton, commissioned by the Australian Taxation Office (ATO), revealed that nearly half of Australians surveyed feel inconvenienced when they don’t have the option to pay electronically.

    Assistant Commissioner Matthew Bambrick said the research suggests cash-only businesses may be missing out.

    “The real cost of cash to business seems to be twofold. Consumers are twice as likely to associate ‘cash only’ as negative rather than positive. While the majority of businesses are run by honest Australians who want to do the right thing, being cash-only may have a direct impact on reputation,” Mr Bambrick said.

    “Secondly, time is money for business. Tap-and-go payments cost an average of nine cents less than cash payments, and are nearly twice as fast. This research suggests cash-only businesses take a hit to their bottom line by not offering electronic payment.”

    Two thirds of respondents believed that cash-only small businesses are likely to be paying less tax than they should, regardless of whether this is true.

    The report also revealed that over 40% of cash-only small business owners have never investigated electronic payment systems before.

    “While cash is legal tender and we know that some businesses may be used to dealing only in cash, this research suggests that business owners may want to think about the benefits electronic payments can bring and consider what might work best for them,” Mr Bambrick said.

    On the other end of the spectrum, businesses that only accept electronic payments cited efficiency, better record keeping and security as the top benefits of not operating in cash.

    “As well as the benefits to reputation and potential cost savings, electronic payment methods make it easier for businesses to keep good records and get their tax and super obligations right,” Mr Bambrick said.

    “Business owners who don’t declare their income correctly may not be able to identify their true earnings, and may have difficulty obtaining lines of credit. They also won't get an accurate result against the ATO’s small business benchmarks, which are useful to help businesses compare themselves against their competitors and similar businesses in their industry.”

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    Key research findings

    • ‘Inconvenient’ was one of the top words Australians use to describe businesses operating on a cash-only basis
    • When asked about their reactions to seeing a cash-only sign, nearly 50% of consumers said it was ‘inconvenient’
    • Nearly two thirds of respondents believe business owners that use cash transactions pay less tax than they should and have an unfair advantage over small businesses that do pay tax on all their earnings
    • For businesses that operate on a cash-only basis:
      • 42% have never investigated electronic payment systems before
      • around 10% have looked into electronic payment systems within the past year
      • 1 in 5 cited 'cost' as the reason they haven't introduced electronic payments
      • 63% said they prefer to deal in cash (more than half of Australians prefer to pay electronically for most transactions)
    • Businesses in general viewed efficiency (58%), less hassle (48%) and more security (44%) as the benefits of accepting electronic payments
    • Businesses that only take electronic payments cited efficiency (74%), easier record keeping (63%) and security (59%) as the top benefits of not operating in cash
    • 3 out of 4 businesses think that taking electronic payments can:
      • save costs: tap-and-go payments actually costs nine cents less than cash payments
      • increase their efficiency: a tap-and-go payment takes on average about 20 seconds whereas a cash payment takes 38 seconds
      • improve record keeping (card payments reduce mistakes and minimise security risks)
    Last modified: 25 Jul 2018QC 56317