It is common practice for American consumers to pay with plastic, but it is important to understand that cash has not become obsolete. In fact, many U.S. consumers actually prefer to use cash to pay for small purchases. Some U.S. business owners do not like dealing with paper bills or coins and prefer to accept electronic payments. This trend seems to be particularly prevalent during the coronavirus pandemic. But, can a business owner legally refuse to accept cash?
The Law
There is no federal law requiring private businesses, individuals, or organizations to accept paper currency or coins as payment for goods and/or services. Indeed, private businesses have the freedom to create their own policies when it comes to types of payments accepted, unless there is a state law stating otherwise. Simply put, the government states that U.S. currency is accepted as legal tender. Since cash holds the same value throughout the nation, a dollar bill is worth the same in any state. That being said, the law does not prohibit the refusal to accept cash as payment.
Under Section 31 U.S.C. 5103, U.S. coins and currency, including notes circulating from the Federal Reserve, Federal Reserve Banks and national banks, is “legal tender” for all debts, public charges, taxes, and dues. Simply put, this means that all U.S. money described in this definition (including paper bills and coins) is a legal and valid offer of payment for debts when provided to a creditor.
Coin Supply Scarce
According to the Federal Reserve, the coronavirus pandemic has resulted in business and bank closures, significantly disrupting the supply chain and normal circulation patterns of U.S. currency — particularly coins. While the economy overall has an adequate amount of coins, the slowed pace of circulation of American currency has resulted in a shortage of inventories in some areas around the country. The U.S. Mint and other federal agencies are working with the Federal Reserve on solutions including a temporary cap on orders depository institutions place for coins and the formation of a U.S. Coin Task Force to identify, implement, and promote actions to help reduce the disruption in the nation’s coin supply.
The Federal Reserve states that since mid-June the U.S. Mint has operated at full production capacity, minting more than 1.5 billion coins that month and plans to mint 1.65 billion coins each month for the rest of 2020. As the U.S. economy recovers and businesses reopen across the nation, it is expected that more coins will go into circulation through retail and banking channels and eventually end up in the Federal Reserve, allowing for a restocking of coin inventories.
Your Legal Questions Answered
So, an American business owner can refuse to accept cash payments. If you are experiencing other legal issues, including if you or someone you know has been hurt in a Nevada accident, contact the skilled Las Vegas personal injury lawyers at H&P Law.
