The reason this damaged bank note was still useable

A retail worker has shared a photo of a damaged bank note that was accepted at their business, asking for advice on whether it is still useable.

"This was accepted at work, is it still okay to use?" they wrote on Reddit's 'Australia' thread.

"Will the bank still accept it like this or should it be thrown out?"

The photo shows a $20 note that has a portion missing from the top of one side.

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A debate over damaged bank notes quickly ensued, with one commenter explaining that if "less than 20 per cent of the banknote is missing", full value is paid.

"If between 20 and 80 per cent of the banknote is missing" they explained, "value is paid in proportion with the percentage remaining".

The Redditor cited the Reserve Bank of Australia's damaged banknotes policy

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Despite this information, one retail worker said "any cashier can still tell you no they won't take it".

"Gotta go to a bank for that," they added.

"Yup, always best to just take it to the bank and have them sort it for you. At least while we still have in-person banks, once they're gone we'll be up s**t creek in that regard," another said.

Another felt the percentage policy outlined by the Reserve Bank made sense "or else people would just be cutting $10 bills in half and claiming them separately, thus getting $20 out of one $10 bill".

One Redditer shared their own experience taking a damaged note to a bank.

"I did this once with a half shredded $5. It took it to Bendigo bank and it took like 2 weeks to turn the note around and give me like $3 for it," they shared.

"A smart cashier would just refuse a damaged note to avoid the hassle, since it's not until exchanging it at the bank that they will find out the note's final value."

Another pointed out that the Reserve Bank's guidelines are for banks but a "business doesn't have to follow them and can legally say they don't accept damaged notes at all".

"Shops don't have to accept them. It's the reserve bank who will pay you for them. A shop can accept them and then send them off to get the money it's worth etc," another said.

The consensus seemed to be to take the damaged note to the bank and hope for the best.

"Just take it to the bank," one Redditor commented, with many echoing their advice.

"The Reserve Bank recommends that owners of damaged banknotes submit their damaged banknotes to their bank/financial institution," the Reserve Bank of Australia states on its website.

"These institutions are encouraged by the Reserve Bank to accept all claims.

"The value of an incomplete banknote may be estimated using grids provided by the Reserve Bank, however, its assessed value will be determined by the Reserve Bank and may be different from an estimate made using the grids.

"Badly damaged and contaminated banknotes need to be forwarded to the Reserve Bank's National Banknote Site (NBS) for assessment. Banks/financial institutions will ensure that the claim is securely delivered to the NBS on behalf of the claimant."

This 'grid' was previously explained by 9News' Stuart Marsh who said, "Every bank is given a set of "grids" by the RBA that can determine how much a damaged banknote is worth. If you only have half a $20 note, well then you've only got $10."

The issue of customers using damaged bank notes is a less common one these days as cash use continues its rapid decline.

University of NSW economics professor Richard Holden told Sydney Morning Herald Money Contributor Bec Wilson Australia is "definitely moving towards a cashless society, probably in less than five years".

Australia was predicted to be 98 per cent cashless by 2024, with cash payments expected to fall to 2.1 per cent of in-store purchases.

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