Absolutely, cashless businesses are legal! Although, some cities and states have passed ordinances or laws mandating that businesses in their local jurisdiction accept cash payments, there is no federal law on the books requiring private businesses to accept physical cash. Cities like Philadelphia, New York City, and San Francisco, however, require businesses to accommodate unbanked consumers by mandating that they accept cash payments.
While U.S. currency showcases the stipulation: “This note is legal tender for all debts, public and private,” such a phrase only applies to the repayment of debt, not sales transactions.
Before transitioning to a cashless business model, it’s imperative to research your local and state laws to ensure compliance.
Ready Credit helps businesses navigate such regulations by offering compliant solutions—like the ReadySTATION® cash-to-card kiosk and ReadyCARD® Prepaid Cards—allowing customers to convert cash into a digital form of payment on-site. This enables businesses to operate more efficiently while still serving cash-paying guests and remaining fully compliant with local laws.
Can a Business Refuse Cash?
Yes: Under federal law, a business has a legal right to refuse cash payments. However, if a business exists in (or is incorporated) in a state or local jurisdiction requiring cash payments, then they must follow all applicable local and state mandates.
Consider the following points before transitioning to a cashless business model.
- No Federal Requirement to Accept Cash
Regardless of the status of legal tender inscribed on U.S. currency, federal law does not mandate businesses to accept cash payment for in-person sales transactions.
- Legal Tender Defined
Legal tender refers to all forms of currency that a government officially recognizes and deems valid. Courts are then required to recognize legal tender as valid and sufficient in situations where a consumer or institution must repay a debt or resolve other financial commitments.
There is no requirement under federal law, however, for a private business to accept cash for in-person sales and transactions.
- State and Local Laws May Vary
In an effort to accommodate unbanked and underbanked customers, several cities and states across the U.S. have passed consumer protection laws mandating businesses accept physical cash payments.
- Business Motivations for Going Cashless
Most businesses choose to become a cashless enterprise for several reasons, including:
- Improve operational efficiency
- Enhance the customer experience via faster transactions and reduced waiting times.
- Make their premises safer for employees by deterring theft.
- Experience cost savings by eliminating cash handling responsibilities.
- Consumer Impact & Equity Concerns
Cash remains king for our most vulnerable populations who do not have access to a bank account or other financial institution. Lawmakers and consumer advocacy groups continue to fight for mandatory cash acceptance on their behalf.
However, easy to use Cash-to-Card® Kiosks and other cashless payment solutions are bridging the gap and ultimately accommodating all payment preferences, leaving no one behind.