A small business owner in Ceduna says he is owed $100,000 and may have to close his doors because of the introduction of the cashless welfare card into the town.

Malcolm Spry said he was told by representatives from the Department of Health and Human Services that his small, family-owned business, Homescene & Outdoors, would “thrive” once the card was implemented.

He said he was initially open-minded about the card, which has seen welfare recipients in the trial sites of Ceduna in South Australia and Kununurra and Wyndham in Western Australia receive 80% of their welfare payments into a restricted debit card. It cannot be used to withdraw cash or buy alcohol or gambling products.

Before the card’s introduction, Spry said he allowed low-income customers who were on welfare or struggling financially to buy goods including blankets, nursery items, bedding and heaters and to take them home and use them without paying upfront.

“They needed those things now, not at the end of winter when they could finally pay a layby off,” the 62-year-old told Guardian Australia. “They’re needy people. Some would be crying, saying how cold they were.”

He arranged for those people to pay for their purchases in instalments using the government’s Centrepay system, a free voluntary bill-paying service for welfare recipients where bills for items such as rent, childcare or essential household goods could be deducted directly from Centrelink payments.

Malcolm Spry with customers in his story in Ceduna. He says the cashless welfare card has put the future of his business at risk, because customers aren’t making credit repayments any more. Photograph: Malcolm Spry

He said for almost 15 years he has been letting customers pay off goods in this way and that he had never had any problems. Thousands of customers honoured their repayments through the Centrepay system, he said.

I’m angry at the people that implemented the card. They’re heartless Malcolm Spry

But he said since those customers were put on the cashless welfare card, which is compulsory for all working-age welfare recipients in the trial towns, the repayments to his store had dried up. People were cancelling their Centrepay deductions or reducing repayments to trivial sums, he said.

Spry believes this is because Centrelink arranges for bill payments for items such as rent and outstanding fines to be automatically deducted from the cashless welfare card at the point of sign-up. It gave people less discretion around how and when bill payments were made, he said. People no longer had enough money left on their card to pay back his business once other automatic payments had been deducted.

“I was willing to see how the card went and now I’ve gone totally against it,” Spry said. “If you had of asked me a few weeks ago what I thought of it, you wouldn’t have gotten anything out of me. I’m a private person. I know everyone in the community. But when you know something is wrong, you’ve got to speak up.”

But he said he was not angry at those who were no longer making repayments to his store. He said they had no choice and that the card had taken away discretion over their income management and spending.

“I’m angry at the people that implemented the card,” Spry said. “They’re heartless. My family started this business in 1931 but if the card isn’t scrapped we will shut our business. We don’t want to hand it to our kids like this.

“I have $100,000 in outstanding payments from the past few months. I was told by two government representatives, ‘Your business will thrive under this card.’ They don’t care about what businesses are facing.”

Spry said he has stopped allowing Centrepay repayments altogether in the past month, a decision he said he found “heartbreaking” owing to the high number of people in need of goods like clothing and heating.

Spry broke down sharing his story with politicians from the South Australian government’s Aboriginal lands parliamentary standing committee, who visited Ceduna last week and on Friday night held an informal meeting with him and a handful of others about the cashless welfare card. Members of the committee have not returned calls from Guardian Australia requesting comment.

Guardian Australia has sought comment from the Department of Human Services about the cashless welfare card and has asked a series of questions about how automatic bill repayments are taken from the card, which kinds of bills are deducted and the process of consent required before payments are authorised.

The Greens senator Rachel Siewert has been speaking to communities about the card’s impact. She said she was aware of Spry’s situation, which she described as “distressing”.

She has previously criticised the government’s independent assessment of the impact of the card carried out by Orima research, saying the data used to inform their findings lacked transparency and that the evaluation was not thorough.

Siewert said she was considering pushing for a Senate inquiry into the cashless welfare card. But, as a priority, she said she wants qualified researchers to carry out a comprehensive and independent review of the card and its impact in the trial communities.