Are you confused about whether it is illegal to refuse cash? We’ve all been there, at a store or a restaurant that posts signs and notices about not accepting large bills or even cash altogether.

With the onset of the COVID-19 pandemic and the uncertainty about how the virus spread in the early days, many retailers and restaurants stopped taking cash out of an abundance of caution. 

Whether or not public health agencies in some regions recommended it, or ordered limits on the use of cash during the pandemic, many people began wondering: is it illegal to refuse cash?

But despite being known as “legal tender,” refusing cash transactions for goods and services is in fact not illegal, with some notable exceptions. 

Legal tender and payment methods

With much of the developed world increasingly relying on electronic payment methods such as debit cards, credit cards, and newer smartphone-based or “digital wallets” methods like Google and Apple Pay, fears about a cashless society abound.

With the widespread adoption of new technologies, it’s easy to forget or ignore the fact that not everyone has a smartphone or even a bank account. Accessibility and inequality concerns about the phasing out of physical currency continue to shape public debate about the role of cash in an increasingly electronic-based commercial environment. 

In other words, the digitization of the stream of commerce may be inevitable, but mitigating unforeseen consequences for vulnerable populations remains a key sticking point in the societal transition to a cashless, digitally-dependent world. 

Is it illegal to refuse cash?

North America, in this regard, is somewhat behind the rest of the world when it comes to mandating the use of cash over more modern payment methods.

As the BBC noted back in 2017, the country of Sweden was an early adopter of electronic payments over cash, where the use of coins and notes made up only one percent of transactions in the country annually. The BBC also noted the common sight of signs in store windows about how they don’t accept cash. 

Other countries, such as China, have widely accepted the use of electronic payment methods with a vast array of app-based payment processors catering to those who prefer a smartphone over a change purse.

But the backlash against cashless societies continues as public debate rages about the future of commerce and modern economies, where government-back currencies are subject to inflationary pressures unseen in decades. 

Legal Insights: The Truth about Refusing Cash Transactions

On the heels of that record inflation, the world has seen the emergence of cryptocurrencies and virtual stores of value such as non-fungible tokens, both touted as viable though unstable alternatives to government-backed fiat currencies.

Monetary policies in major world economies, though, have been slow to catch up to emerging financial technologies which have upended the current zeitgeist about the meaning of money and what truly holds value.  

Legal Tender Laws in Canada, the U.S., and the United Kingdom

In Canada, the definition of a “legal tender” transaction involving the exchange of cash, in coins or bills also known as notes, is contained within the Currency Act. The act places limitations on the number of coins you can use for a legal tender payment.

The limitations allow for $40 in payments made in toonies; $25 in loonies; $10 in dimes; $5 in nickels; and 25 cents in pennies, which are no longer in circulation in Canada. 

(Source: StatsCan) 

In 2020, while the COVID-19 pandemic was still causing havoc in the country’s economy, the Bank of Canada implored retailers to continue taking cash as a form of payment.

The bank told Canadians that they should use whatever payment method they were “most comfortable with,” warning retailers that refusing cash could put an “undue burden” on people with limited options for paying for goods and services. 

Business and cash transactions

In the United States, the question of whether it is illegal for a business to refuse cash is also common and similar to Canada, it’s not illegal there either.

According to the Federal Reserve, there are no federal laws against refusing cash for private businesses, which are allowed to design and implement their own policies and procedures on the acceptance of cash.

Legal tender in the U.S. includes coins and notes issued by the Federal Reserve, though the law doesn’t mention private business transactions, but rather a legal tender for the payment of debts and taxes and other public charges.  

Illegal to refuse cash?

While there’s no federal law in the U.S. making it illegal to refuse cash, state laws and municipal bylaws might say otherwise. Some American cities, for example, have prohibited local businesses from refusing cash in San Francisco and Philadelphia, while many other major urban centres are contemplating similar measures.

The state of New Jersey and Massachusetts mandate that stores accept cash, and Congress has also explored a similar statute federally. 

Two bills introduced in Congress have attempted to stem the tide of virtual transactions overtaking cash as king, including the Cash Always Should be Honored Act and the Payment Choice Act of 2019. The fate of those bills, however, remains up in the air. 

In the United Kingdom, meanwhile, there has been significant push-back against shops and retailers refusing cash from customers. In an independent report known as the Access to Cash Review, a final report released in 2019, advocates urged the U.K. government to ensure the survival of cash through legislation.

Cashless society concerns arise

The report warned that in the digital economy without cash, the country was at risk of leaving “millions behind” by allowing retailers and stores to essentially freeze out vulnerable populations who rely on cash for their daily essentials. 

A petition to the U.K. parliament, which currently has more than 24,000 signatures sought to make it illegal to refuse cash. In a response posted by the country’s treasury, however, the British government apparently has no plans to force businesses to accept cash in favour of allowing businesses to choose for themselves. 

Exploring the Legal Aspects: Can You Say No to Cash Payments?

While some U.S. states and cities have made it illegal to refuse cash payments, western governments have been reticent to force businesses to accept it by law. Federal governments in Canada, Britain, and the United States are yet to mandate the acceptance of cash despite the potential harms associated with fully cashless societies.

With the emergence of new virtual payment methods and digital currencies, the long-term effects on the world economy remain to be seen and the price of purported progress can’t be printed on a receipt, save for perhaps a question mark next to a dollar sign.