Ways to pay in Australia – plastic money
In Australia, you cannot avoid plastic money for payment. This is partly because all banknotes are made of plastic. Australia was the first country in the world to switch from paper banknotes to polymer plastics.
In addition, paying cashless in Australia is the rule rather than the exception. Most of the time you just pull out your plastic card, which makes it very easy and uncomplicated to pay. However, it is often quite confusing for foreigners to ask what kind of card payment you want and which account should be addressed. To make it easier, I have summarized the main payment methods (new payment options, such as Apple, Samsung, Android, Garmin or Fitbit Pay, I will list another time when they are more widespread).
- Cash
- EFTPOS (Electronic Funds Transfer at Point of Sale)
- Paying by card
- Payment from your bank account
Cash
Australia’s national currency is the Australian dollar (AUD), which is issued in banknotes of 5, 10, 20, 50 and 100 AUD. Coins are available in 5, 10, 20 and 50 cents as well as 1 and 2 dollars. Although the $100 banknote is the second most issued, you almost never get to see it. Where are they hiding? So the highest banknote in daily use has the value of about 30 EUR. It is also noteworthy, according to the Australian Central Bank, that the average cash amount per resident is $3,000…
Only about 37 percent of all commercial transactions in Australia are made in cash, while in Germany cash is accounting for about 50 percent and in Sweden for only 18percent.
From 1st July 2019 is will be no longer legal to pay for goods and services over $ 10,000 in cash. Any payment above $ 10,000 must then be made by check or credit / debit card. The main reason for this regulation is the avoidance of tax evasion (see also article in the Guardian).
The plastic banknotes have the characteristic of sticking tightly together, especially when they are new. So be careful that you do not give away more than you want.
And some have a typo.
If you still want to pay with cash, it is definitely not advisable to change cash of another currency. The exchange rate and associated fees are usually very, very bad. Even if money exchange service offers “zero commission”, their exchange-rate will incorporate their profit.
Thus, there are mainly 2 ways to get cash.
ATM (Automated Teller Machine)
When withdrawing from the ATM you will usually always asked what kind of your accounts you are going to use. For foreigners this is often confusing, because these distinctions do not exist in other countries:
- Cheque/Debit
- Savings
- Credit
This is because many Australian banks offer cards that can be used for transactions through the MasterCard, Visa and EFTPOS systems. In some cases, you can use the same card to access various of your accounts (for example, your regular bank account and your savings account).
So, if your card is only linked to your regular daily account, it will be charged regardless of whether you choose cheque, savings or credit. However, your choice determines which system will be used in the background for the transaction and thus the amount of fees which will incur.
Using your daily bank account one should always choose “Cheque / Debit” (or “Savings”), since the payment then usually passes through the EFTPOS system and typically no fees will incur.
Since 2017, the big banks no longer require general withdrawal fees when withdrawing money with a card from another bank. An overview can be found here.
EFTPOS (Electronic Funds Transfer at Point of Sale)
In many shops, restaurants etc. the EFTPOS system is used. Here you can also get cash out when paying, but often only when the payment exceeds a minimum amount (often $10). So, if you’re shopping for $10 and you still want $20 cash out, your account will be charged $30.
However, when paying – if possible- you should select “Check / Debit” (or “Savings”). This will ensure that you have enough money in your account because it will be verified online.
Paying by card
Swipe/insert – card-reader
As with the withdrawal of money at the ATM, you will usually be asked which account should be used Cheque / Debit, Savings or Credit.
If you press Cheque / Debit or Savings, your transaction will be processed through the EFTPOS system after entering your PIN. This means that the store immediately receives its money and your account is charged instantly, so there is no difference between the current and the available balance.
However, if you press Credit, the transaction will usually go through the MasterCard or Visa system. A MasterCard or Visa fee is paid by the retailer’s bank. If you choose Credit, it usually takes longer for the store to get its money. When you view your bank statement or account balance, you will notice a difference between your current and available balance.
Retailers prefer “Cheque / Debit” or “Saving” because the retailer’s costs are lower (some of the largest retailers even receive a fee for EFTPOS transactions). Banks, on the other hand, earn more money when the “credit” key is pressed. This explains why banks often encourage their clients to choose “credit.” Often also fees will incur for you.
Contactless Payment
“Tap and go” payment systems for payments up to 100 AUD, such as payWave (VISA)or PayPass (MasterCard), are widely used. The credit cards have a built-in near-field communications (NFC) chip that can wirelessly transmit your card’s data. Contactless payment is activated by a radio antenna embedded in the credit card. For most new credit cards that come with payWave or PayPass, you cannot disable the feature. However, you can still shop by signature or PIN
For contactless payment, you only need to move your credit card less than 4 cm across the terminal and the transaction is processed. You do not need to select “Check / Debit, Savings or Credit” as the transaction is automatically debited from your account by the credit card system. When the transaction has been completed, the display lights up and a confirmation message appears.
However, retailers pay relatively high fees when using these systems, which they sometimes pass on to customers (although they are not supposed to). It is therefore not uncommon that a 10 cent fee occur when e.g. buying a coffee for AUD 3.50. However, companies that charge an additional fee at the checkout have to disclose this clearly and may not charge you more than they pay to settle the transaction with their bank. The only way to completely override the charges is to use cash or swipe/insert the card, enter the pin and select Cheque / Debit or Savings.
Although the good news are, that eftposTap & Pay™ capability is now finally also available on millions of Australian cards.
According to an article on ABC, Australian pay more than $200 million a year by paying with cards over cash.
Payment from your bank account
Internet Banking – EFT
A transfer within Australia from one account to another is similar to the transfer as it used to be in Europe and requires only minimal details. The two pieces of information your bank needs at least are:
- The BSB number, a kind of bank code. BSB stands for Bank, State and Branch.
- The account number of the recipient
When you make a transfer online, the following data is usually requested:
- The account (yours) from which the money is transferred
- The account of the recipient to whom the money is being transferred. You have to enter the account details of the recipient (name, BSB and account number)
- The amount you want to transfer
- A description / the purpose of your transfer
BPay
BPAY is a bill payment service accepted by over 45,000 billers in Australia. You can pay anywhere, anytime if you have internet access or mobile banking.
As with Post Billpay, you will need the biller’s code, as well as the customer reference number (CRN), the amount, and the date from your bill.
BPAY is a registered trade name of BPAY Pty Ltd, a wholly owned subsidiary of Cardlink Services Limited. Cardlink is equally owned by the four major Australian banks: The Australian and New Zealand banking groups, the Commonwealth Bank, the National Australia Bank and Westpac.
Cheque
Even if it is less and less common, you can still pay your bills by cheque. For large sums, such as when buying a car or buying a house, bank cheques are generally preferred.
The term bank cheque refers to a check that is payable by a bank itself, as opposed to a normal cheque, which only has to be paid from the credit of a specific customer account. The point is that the person receiving the cheque has the security of knowing it’s payable by the bank and thus cannot bounce (not so long as the bank is solvent). A bank check can be obtained from your bank (sometimes online). For both types of cheque, it is important to include the reference number and the correct address of the recipient on the cheque.
Direct Debit
A direct debit is an authority given by an account holder to a third party to take money from a nominated account or credit card account. Once you have agreed, the money is deducted automatically.
Direct debits from a bank account are useful for paying regular fixed amounts, such as housing, utilities or other recurring payments.
Some financial institutions may charge a fee to process a direct debit.
Post Billpay
Post Billpay is a service from Australia Post that allows you to pay your bill
- Online – pay bills online any time
- Mobile or tablet – scan and pay bills with the mobile app of Australia Post
- By phone – call 13 18 16 to pay your bills 24 hours a day, 7 days a week
- In person – pay your bills at more than 3,200 Post Offices
You will need a bill payment code (Post Billpay code) and a reference number. You will find these details on the bill you want to pay.