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There are a few restaurants in my area where cash payments are not accepted. They only accept electronic payments such as credit cards, local debit cards, etc. Is this legal?

On most currencies, it is written on the note something along the lines of "this note settles X dollars of debt". If a customer offers to purchase a product or settle the bill for a service they have consumed (e.g., food already is eaten, gas already pumped into the car) via cash, can the seller deny it?

On a related topic, must business entities accept cash for invoice settlements? I know that the party receiving the payment can charge a "reasonable fee" for processing the cash (e.g., thousands of coins). Can they, for example, demand the debt be settled by bank transfer only?

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  • I don't know about the UK, but this is legal in the US. Cash is legal "for all debts" but it doesn't mean that cash must be accepted for all debts.
    – Ron Beyer
    Aug 24, 2018 at 14:28
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    @RonBeyer: I'm pretty sure that's exactly what it means. Legal tender must be accepted in payment of a debt. You can make it harder to pay a debt with cash, but you must accept cash. Transactions often don't involve debt, though, and cash need not be accepted in those cases. (You can have a drink machine that only takes credit cards, for example.)
    – cHao
    Aug 24, 2018 at 15:12
  • @chao law.stackexchange.com/questions/21975/…
    – Ron Beyer
    Aug 24, 2018 at 17:47
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    @RonBeyer: Entirely consistent with what i said. You must accept cash in payment of a debt. But you need not accept it if the offerer is merely buying goods or services as opposed to paying off a debt.
    – cHao
    Aug 24, 2018 at 18:02
  • £5 coins, £20 coins, £50 coins and £100 coins are also legal tender in the UK - royalmint.com/help/trm-faqs/legal-tender-amounts
    – Simon
    Sep 2, 2021 at 10:31

2 Answers 2

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The Bank of England actually makes this pretty clear with the following line:

Legal tender has a very narrow and technical meaning, which relates to settling debts. It means that if you are in debt to someone then you can’t be sued for non-payment if you offer full payment of your debts in legal tender.

Essentially, if you are in debt (frequent examples are a taxi ride or a meal at a sit-down restaurant) then you can use legal tender to pay off that debt. But that doesn't necessarily mean they have to accept it. It only means that they cannot sue you if they do refuse to accept it. But the refusal wouldn't itself alleviate the debt either. They could technically return to you at some point and say "ok, fine, we'll take the cash" and you'd still be obligated to provide it to pay off your debt.

It's also worth emphasizing that this only applies to situations where the payment is to alleviate a debt, for services that have already been provided before you are billed. It would not apply while buying groceries at the supermarket. Even restaurants where you pay for your food up-front and then receive it afterwards can refuse cash payment. In those situations the services are prepaid and you are not ever alleviating a debt.

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    You might add that in the UK the number of coins that are "legal tender" is limited. 100 one penny coins are not legal tender, they can be refused even for settling a debt. 1p and 2p up to 20p, 5p and 10p up to £5, 20-50p up to £10, pound coins unlimited are legal tender.
    – gnasher729
    Aug 27, 2018 at 23:17
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    And the classic debating point with some Scottish people who will assert that Scottish banknotes are 'legal tender' in England (they are not, even in Scotland, where I believe no banknotes are legal tender).
    – Neil Tarrant
    Sep 10, 2020 at 9:48
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In the United States, legal tender (cash in American currency) must be accepted for a debt, that is, an expense you have already incurred. Look at an American dollar bill. It says right on it "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE." (Best money in the world. Just ask the drug dealers.)

A vendor such as a restaurant can inform you beforehand that they only accept credit cards. This can be done since no debt has been incurred at that point.

Amazon retail stores do not take cash. You can't go through the front door or turnstile unless you have made prior arrangements to pay another way. It's legal because you have not had the chance to incur a debt.

At a Costco gas station today you have to give the pump your credit card, no cash is accepted. There is no debt incurred when you pay in advance.

If you incur a debt and the vendor declines to take cash then you can offer them a check or to mail them a check later. At worst, the vendor calls the police for your nonpayment and you show the police your money and the police will be on your side.

A vendor is entitled to verify that the cash you offer is legitimate currency, that is, it isn't counterfeit and it adds up to the correct amount. If your purchase is for a large amount, eg, a new fire truck for $500,000, and the contract has already been signed, then they have to take cash.

Personally, in the latter case, as the seller of fire trucks, I would drive to the bank with you, give the bank the cash, and ask them to issue a cashier's check to you for the amount you give them. The bank would count the money automatically and check it for counterfeit bills. They will deposit the cash and issue you a check you can use to buy the fire truck. This is a small service for a customer. If I take a counterfeit bill I am stuck. If the bank takes a counterfeit bill it is stuck. (They could call the police on you, of course. And yes, fire trucks really do cost that much.)

A debt is different from a purchase you intend to make on credit.

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