"Legal Tender" Does *Not* Mean that You Must Accept Cash!

U.S. currency has a legend stating "This note is legal tender for all debts public and private." Yet despite that legend, U.S. businesses are not obligated to accept cash payments if they don't want to.

The U.S. Department of the Treasury discusses whether the “ legal tender ” language on U.S. currency requires that cash payments be accepted. Quoting a portion of Legal Tender Status (link and emphasis added):

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically  Section 31 U.S.C. 5103 , entitled “Legal tender,” which states: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.”

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor.  There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.  For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

So if anyone tells you or your business that you must accept cash payments, you can reply “not true” and refer the Treasury page cited above.

This article first appeared, in slightly different form, on the The High-touch Legal Services® Blog…for Startups!