Private businesses are not legally required to accept cash, the Federal Reserve says. They are free to develop their own policies unless state law says otherwise.
A growing number of businesses are going cashless, meaning they are no longer accepting cash as a form of payment. Instead, customers who shop at these businesses have to use credit or debit cards, or a form of mobile payment, like Apple Pay, to make purchases.
Some people on social media claim banning cash is illegal. Many of the social media posts highlight a statement appearing on all U.S. paper currency that says “this note is legal tender for all debts, public and private.” The social media users argue that purchases are debts, therefore businesses are legally required to accept their cash – or legal tender – as payment.
VERIFY viewer Tim says he recently encountered a cashless concession stand during a trip to a local stadium and he emailed our team to ask if that violates federal law.
THE QUESTION
Does federal law require businesses to accept cash?
THE SOURCES
THE ANSWER
No, there is no federal law that requires businesses to accept cash. Private businesses are “free to develop their own policies on whether to accept cash unless there is a state law that says otherwise,” according to the Federal Reserve.
WHAT WE FOUND
There is no federal law mandating that a private business accept cash as payment for goods or services, according to the Federal Reserve. However, the U.S. Treasury Department and Federal Reserve both say that private businesses are “free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.”
Legal tender is defined by Title 31 of the U.S. Code of Laws. The law says that U.S. coins and currency are “legal tender for all debts, public charges, taxes, and dues.” But this means that the cash is worth the amount it represents — it does not mean that a private business must accept the cash.
The Treasury Department says there is a long history of businesses restricting cash, such as a bus line that may prohibit payment of fares in change 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,” the Treasury Department explains.
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Although there is no federal law that requires businesses to accept cash, there has recently been a push for that to change. The Payment Choice Act would require businesses with a storefront nationwide to take cash for transactions that are less than $2,000. The bill was folded into a defense bill and passed in the House earlier this year, but it is still awaiting action in the Senate.
Some cities and states, like Washington, D.C., San Francisco and Colorado, also have laws that require local businesses with a storefront to take cash, with some exceptions.
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