Do Merchants Have to Accept Legal Tenders?

It has long been the case that some local merchants only accept cash as payment for their goods or services.   However, since Diners Club was introduced as the first multipurpose charge card in 1950, the number of potential payment methods has grown by orders of magnitude. 

In addition to cash, checks, and credit cards from a multitude of different companies, consumers can now often pay with debit cards, digital wallets (think Apple Pay, Google Pay, or Venmo), merchant-specific apps (e.g. Starbucks), third-party online sites (e.g. PayPal), and cryptocurrencies like Bitcoin.  But cash is still king, right? 

Sign at a local market for a merchant dealing only in cash. Photo taken 12/29/22

Not always.  Driven in part by the COVID pandemic, there has been a recent trend towards merchants not just accepting alternative payment methods but requiring them.

Sign at a merchant refusing cash.  This merchant was only yards away from the sign in Image 1.  Photo taken 12/29/22.

At a market made up of numerous independent merchants, a local creamery displayed several signs making clear that it only accepted cash.  Only a short walk away, the local comic book vendor had signs specifically saying it did NOT accept cash.

On the face of a US $1.00 bill, it clearly says “This note is legal tender for all debts, public and private.”  Section 31 U.S.C.A. § 5103 states “United States coins and currency … are legal tender for all debts, public charges, taxes, and dues.” So is it legal for a vendor to refuse cash payments?

So long as there are no state or local laws to the contrary, the answer is yes.  As answered by the Board of Governors of the Federal Reserve System:

“There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.”