Q. Is it legal for a business in the United States to refuse cash as a form of payment?
A. Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal reserve notes and circulating notes of Federal reserve banks and national banks] are legal tender for all debts, public charges, taxes, and dues."
This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, 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 which says otherwise.
I read through this statute at some point awhile back. To my understanding, one way businesses get around this is by charging money before the product/service first--essentially putting themselves in "debt" first. By not providing the product/service until you pay, you aren't arguably in any potential form of debt and a business can dictate the form of payment they want.
If you pay after receiving a service, then you could loosely be considered in debt. Usually, that doesn't hold enough water from what I read and it really means, until you go to court and have an established debt, you're forced to pay through whatever mechanisms were agreed to in the transaction. Only then does it have to be payable by cash.
It's interesting to me because the transactions you're most likely to have cash on hand and pay for are items most would never have to go in debt for (a coffee, lunch, etc.) whereas large transactions you may need to go in debt for ideally use some other non-cash medium (loan, cashiers check, etc.).
Basically makes cash useless (why I rarely carry more than say $50 anymore).
More interestingly, you'll see businesses adapt quickly to accept cash when their electronic payment/management system goes down for a day. They're incredibly resourceful when it's convenient for themselves. I've had this happen at a coffee shop that was cashless that suddenly decided they'd accept cash when the other option was to not make money.
> Businesses that still want cashless transactions can provide a machine that exchanges cash for a gift card, but must accept cash if the machine breaks down, according to the new law.
This would be a huge issue to me. I will admit that I don't live in NYC, but if I was to travel there on business and a random restaurant made me trade in $20 for a gift card to pay for a $8 meal in a place that I will probably never go back to, that's $12 out of my pocket that I paid in "cash is inconvenient" tax to that restaurant.
Even worse, if I go to a store all the time (e.g. it's the only grocery store within walking distance and I don't have a car) but I'm underbanked, then I have to continually keep money in their "bank".
> "Your total comes out to $20 but you only have $8 in store-bucks! Don't have exactly $12 in cash? That's a shame. I guess you'll have to come back to spend the rest!"
Later you find out that the gift cards expire. Oops.
We should focus on finding a way to provide vulnerable groups a way to pay at cashless stores rather than increasing the overhead of operating a business (accepting cash, maintaining change, coordinating bank deposits, etc.). Many of these places are coffee shops where their entire ledger is automated.
How can we complain that small businesses are closing in NYC and then continue to add regulations which may make it harder for them to operate? That seems like an oxymoron.
The vulnerable are often underbanked. They might not have a bank account, debit or credit card, or smartphone with Venmo/Cash app/(whatever app is popular today).
Cash is the easiest way to help vulnerable groups. If a homeless person wants to buy a cheeseburger, its better to accept the cash rather than have him fill out FORM NY-892-F INDIVIDUAL RETAIL ESTABLISHMENT CREDIT ACCOUNT CREATION FORM, proposing to send a monthly bill to his non-existent address, or non-existent email.
Does cash make it harder to operate? That sounds backwards to me. Traditionally, small businesses love cash. The open secret is that no small business reports 100% of their cash income to the government.
I've had small business owners tell me that literally no small business could survive if it had to pay all the taxes they technically owed. There are some near me which offer significant discounts for paying cash.
Cash is legal tender and should be required to be accepted at all businesses. Electronic payments have overhead, too, so I don't accept that as an argument.
Electronic payments are a privacy concern for me. It's a big data collection source and it fuels companies like Axciom who built extremely detailed consumer dossiers on everyone.
Health insurance premiums tied to purchases? A teenager buying condoms who doesn't want their parents to know? Denied employment because you've purchased nicotine?
> Cash is legal tender and should be required to be accepted at all businesses.
They're legal tender for debts. If they don't want to sell you something because you can't agree mutually acceptable payment terms then there is no debt.
All this concern about the unbanked/underbanked could be more effectively channeled into making banking more accessible IMO. As an example, the city could provide a free reloadable prepaid card to people who qualify as underbanked (based on some combination of income and residential address).
Does this bill mean car dealerships (more popular in the outer boroughs than most people think) and jewelry shops will no longer be able to refuse briefcases full of cash as payment?
> As an example, the city could provide a free reloadable prepaid card to people who qualify as underbanked (based on some combination of income and residential address).
Then you still have the people who are underbanked for some reason but don't qualify as underbanked under that criteria. The only reliable way to do it would be to provide it to everyone, no questions asked (you can't even require proof of identity or residence, otherwise you'd still have the homeless people who lost their documents and can't get new ones). In the end, that reloadable prepaid card becomes a more complicated, less reliable form of physical cash.
Its not all about cash vs non-cash. It can also be about privacy. You might not want some embarrasing item on your bank statement for a number of reasons.
I would love a reloadable prepaid anonymous card i could use instead of my own in my everyday life. I would probably use only that if i could find one. There is no such option afaik where i live though. And we are transitioning very fast to cashless. ( Norway )
As someone who in the past year has only used cash to pay for illicit substances, I was quite surprised by the title. Why punish business owners for choosing a more efficient and safe payment method? But having read the article, well, I see it differently. I did not know that cash still played such an indispensable role in the lives of many vulnerable groups in the U.S..
Does anyone have more info on what is meant by "alternative financial services"? I'm guessing they're not referring to bitcoin...
> I did not know that cash still played such an indispensable role in the lives of many vulnerable groups in the U.S..
I'm not even close to "a vulnerable group", but I still use cash for convenience. It's faster than card, most places don't have phone-based payments (I don't use them anyway, never felt worthwhile), and I don't clutter up my bank statements with daily purchases (lunch, groceries, etc).
Cashless stores is something we see a lot in Amsterdam. I always thought that they probably loose a lot of clients, both because of lack of cash and also because they only accept the "pin" card which is, afaik, a Netherlands-only type of debit card.
But at the same time it's also probably safer and less management with accounting done automatically.
According to Wikipedia, the PIN domestic payment network was discontinued in 2012 in favor of Maestro and V-pay debit cards.
The main problem with this is that many countries, even within the EU, don't really issue Maestro and V-pay cards, but rather proper MasterCard and Visa (debit) cards. In my experience it wasn't an issue in Amsterdam. In Brussels on the other hand, I came across a couple places where I could only use my Maestro card.
That said, the unbanked/underbanked population is probably a lot smaller than in the US.
I've been in Amsterdam twice last year, and I was able to pay everywhere with Apple Pay backed by a Visa card (well, almost anywhere, one store required a physical card, and I am not 100% sure Visa would have worked because I used a Maestro debit card there). So apparently most merchants don't limit it anymore - would not make much sense anyway since the EU mandated credit card interchange fees to be below 0,3%. That basically made supporting credit cards almost as cheap as the national payment schemes.
Honestly this seems like progressive posturing that's all too eager to pass prohibitions than actually address the root of issues they're concerned about.
I'd love to see big-picture legislation (like GDPR is for privacy) which could take a bite out of all the tiny cuts of financial mini-hardship that poor people face every day. I just have no idea what it'd look like. Maybe there's nothing better we can do than 100 little laws like this one.
I encourage everyone to try living one day like they're down to their last $20 and have to buy some things they need (pretend you don't have a wallet full of plastic cards and a phone full of passwords). Nearly every time you go to buy something, you'll encounter a situation where you could save money in the long run if only you had a little more to spend today.
Why's that funny? It's not like it exposes some hypocrisy or moral duplicity. They'd rather not accept cash because it's bulky, dirty, slow, and expensive to handle. But if they can't accept anything else for a large number of customers for some reason they will go back to it.
Why the sarcasm? Here in Ireland a major bank was down for several days because contractor of bank located in India screwed up a production deployment or something, resulting in hundreds of thousands of transactions having to be manually reconciled.
In that time people had no access to their money, no tap and pay, chip and pin etc, nothing.
That was quite a lesson in importance of cash, another lesson was about a dozen years ago when all the banks here went to the wall and had to be nationalised in order prevent bank runs.
NYC is home to an industry that stands to benefit from a cashless economy and home to a government that never seems to turn down an increase in their ability to put people under a metaphorical microscope. I would have predicted they would be one of the first places to ban cash and one of the last to mandate businesses accept cash.
I'm really happy to see consumer protection winning out over private interest for money and state interest for power but damn is that a curve ball in this day and age.
[+] [-] mikece|6 years ago|reply
Q. Is it legal for a business in the United States to refuse cash as a form of payment?
A. Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal reserve notes and circulating notes of Federal reserve banks and national banks] are legal tender for all debts, public charges, taxes, and dues."
This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, 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 which says otherwise.
Link: https://www.federalreserve.gov/faqs/currency_12772.htm
[+] [-] Frost1x|6 years ago|reply
If you pay after receiving a service, then you could loosely be considered in debt. Usually, that doesn't hold enough water from what I read and it really means, until you go to court and have an established debt, you're forced to pay through whatever mechanisms were agreed to in the transaction. Only then does it have to be payable by cash.
It's interesting to me because the transactions you're most likely to have cash on hand and pay for are items most would never have to go in debt for (a coffee, lunch, etc.) whereas large transactions you may need to go in debt for ideally use some other non-cash medium (loan, cashiers check, etc.).
Basically makes cash useless (why I rarely carry more than say $50 anymore).
More interestingly, you'll see businesses adapt quickly to accept cash when their electronic payment/management system goes down for a day. They're incredibly resourceful when it's convenient for themselves. I've had this happen at a coffee shop that was cashless that suddenly decided they'd accept cash when the other option was to not make money.
[+] [-] chrisseaton|6 years ago|reply
[+] [-] jedimastert|6 years ago|reply
This would be a huge issue to me. I will admit that I don't live in NYC, but if I was to travel there on business and a random restaurant made me trade in $20 for a gift card to pay for a $8 meal in a place that I will probably never go back to, that's $12 out of my pocket that I paid in "cash is inconvenient" tax to that restaurant.
Even worse, if I go to a store all the time (e.g. it's the only grocery store within walking distance and I don't have a car) but I'm underbanked, then I have to continually keep money in their "bank".
> "Your total comes out to $20 but you only have $8 in store-bucks! Don't have exactly $12 in cash? That's a shame. I guess you'll have to come back to spend the rest!"
Later you find out that the gift cards expire. Oops.
[+] [-] drfuchs|6 years ago|reply
[+] [-] diebeforei485|6 years ago|reply
[+] [-] seibelj|6 years ago|reply
[+] [-] jon889|6 years ago|reply
[+] [-] abalos|6 years ago|reply
We should focus on finding a way to provide vulnerable groups a way to pay at cashless stores rather than increasing the overhead of operating a business (accepting cash, maintaining change, coordinating bank deposits, etc.). Many of these places are coffee shops where their entire ledger is automated.
How can we complain that small businesses are closing in NYC and then continue to add regulations which may make it harder for them to operate? That seems like an oxymoron.
[+] [-] mech1234|6 years ago|reply
Cash is the easiest way to help vulnerable groups. If a homeless person wants to buy a cheeseburger, its better to accept the cash rather than have him fill out FORM NY-892-F INDIVIDUAL RETAIL ESTABLISHMENT CREDIT ACCOUNT CREATION FORM, proposing to send a monthly bill to his non-existent address, or non-existent email.
[+] [-] ken|6 years ago|reply
I've had small business owners tell me that literally no small business could survive if it had to pay all the taxes they technically owed. There are some near me which offer significant discounts for paying cash.
[+] [-] xfitm3|6 years ago|reply
Electronic payments are a privacy concern for me. It's a big data collection source and it fuels companies like Axciom who built extremely detailed consumer dossiers on everyone.
Health insurance premiums tied to purchases? A teenager buying condoms who doesn't want their parents to know? Denied employment because you've purchased nicotine?
Not far fetched.
[+] [-] chrisseaton|6 years ago|reply
They're legal tender for debts. If they don't want to sell you something because you can't agree mutually acceptable payment terms then there is no debt.
[+] [-] diebeforei485|6 years ago|reply
Does this bill mean car dealerships (more popular in the outer boroughs than most people think) and jewelry shops will no longer be able to refuse briefcases full of cash as payment?
[+] [-] cesarb|6 years ago|reply
Then you still have the people who are underbanked for some reason but don't qualify as underbanked under that criteria. The only reliable way to do it would be to provide it to everyone, no questions asked (you can't even require proof of identity or residence, otherwise you'd still have the homeless people who lost their documents and can't get new ones). In the end, that reloadable prepaid card becomes a more complicated, less reliable form of physical cash.
[+] [-] jacques_chester|6 years ago|reply
[+] [-] farrisbris|6 years ago|reply
I would love a reloadable prepaid anonymous card i could use instead of my own in my everyday life. I would probably use only that if i could find one. There is no such option afaik where i live though. And we are transitioning very fast to cashless. ( Norway )
[+] [-] miggol|6 years ago|reply
Does anyone have more info on what is meant by "alternative financial services"? I'm guessing they're not referring to bitcoin...
[+] [-] Izkata|6 years ago|reply
I'm not even close to "a vulnerable group", but I still use cash for convenience. It's faster than card, most places don't have phone-based payments (I don't use them anyway, never felt worthwhile), and I don't clutter up my bank statements with daily purchases (lunch, groceries, etc).
[+] [-] jypepin|6 years ago|reply
But at the same time it's also probably safer and less management with accounting done automatically.
[+] [-] hocuspocus|6 years ago|reply
The main problem with this is that many countries, even within the EU, don't really issue Maestro and V-pay cards, but rather proper MasterCard and Visa (debit) cards. In my experience it wasn't an issue in Amsterdam. In Brussels on the other hand, I came across a couple places where I could only use my Maestro card.
That said, the unbanked/underbanked population is probably a lot smaller than in the US.
[+] [-] Slartie|6 years ago|reply
[+] [-] chrisseaton|6 years ago|reply
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] gnusty_gnurc|6 years ago|reply
[+] [-] ada1981|6 years ago|reply
[+] [-] ada1981|6 years ago|reply
[+] [-] JumpCrisscross|6 years ago|reply
[+] [-] ken|6 years ago|reply
I'd love to see big-picture legislation (like GDPR is for privacy) which could take a bite out of all the tiny cuts of financial mini-hardship that poor people face every day. I just have no idea what it'd look like. Maybe there's nothing better we can do than 100 little laws like this one.
I encourage everyone to try living one day like they're down to their last $20 and have to buy some things they need (pretend you don't have a wallet full of plastic cards and a phone full of passwords). Nearly every time you go to buy something, you'll encounter a situation where you could save money in the long run if only you had a little more to spend today.
[+] [-] huffmsa|6 years ago|reply
[+] [-] chrisseaton|6 years ago|reply
[+] [-] Kaibeezy|6 years ago|reply
[+] [-] fenk85|6 years ago|reply
In that time people had no access to their money, no tap and pay, chip and pin etc, nothing.
That was quite a lesson in importance of cash, another lesson was about a dozen years ago when all the banks here went to the wall and had to be nationalised in order prevent bank runs.
[+] [-] dsfyu404ed|6 years ago|reply
NYC is home to an industry that stands to benefit from a cashless economy and home to a government that never seems to turn down an increase in their ability to put people under a metaphorical microscope. I would have predicted they would be one of the first places to ban cash and one of the last to mandate businesses accept cash.
I'm really happy to see consumer protection winning out over private interest for money and state interest for power but damn is that a curve ball in this day and age.