Can A Business Refuse To Accept Cash – 2 Wants To Know ‘If you are a business and you refuse to take money, you are breaking the law.’
GREENSBORO, N.C. — The lack of coins means that retailers from big box stores like Walmart to convenience store chains like 7-Eleven are asking you not to use cash but to use your card instead.
Can A Business Refuse To Accept Cash
None of these stores banned cash, but many people were upset by the request including a Mississippi Senator. Check out Senator Chad McMahan’s Facebook page.
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“If you buy $44 worth of fuel and I try to pay with a $100 bill and you refuse payment in cash, the debt is paid in full.”
This Facebook post has been shared recently, 66,000 times. Is what the senator posted true? The short answer is no, but let’s explain.
There is no federal statute mandating that a private business or person or organization must accept currency or coins as payment. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.
Right now, Massachusetts, Rhode Island and New Jersey prohibit retailers from refusing cash. New York is to follow this fall.
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North Carolina has no ban on any payment, and NC Attorney General Josh Stein says businesses don’t have to put up a sign telling you what they’re taking, but they should.
“It’s clearly the right thing to do. If a merchant will not accept cash, which is a commonly understood way of making payment, they should let their customers know. That is useful information so that the customer can decide whether they want to do business with that merchant or not.”
According to reports from a CBS station in Mississippi, the senator wants to push Mississippi to adopt a ban on refusing to accept cash. In this day and age, people push cash aside and pay with plastic. In fact, one study found that 80% of people prefer to use card payments over cash. But, just because plastic dominates doesn’t mean cash is obsolete. Many people still prefer to pay in cash. And in some cases, it can be easier to deal with cash than cards. But can a business refuse money? Is it legal to only accept credit cards and other non-cash payment options? Read on to get the scoop.
You may have noticed that some small businesses in your area post signs about not accepting cash. Or, maybe you’re thinking about going cashless yourself.
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According to Section 31 U.S.C. 5103 entitled “Legal Tender”, “United States coins and currency [including Federal Reserve notes and circulating notes of the Federal Reserve Bank and national banks] are legal tender for all debts, public charges, taxes and fees.”
So…what exactly does that mean, and what does it have to do with accepting cash? In layman’s terms, this means that US currency is accepted as legal tender and that cash holds the same value across the country.
It also means that cash is legal tender for all public and private debts. Federal law makes US currency legal tender for paying debts. And as a small business owner, you have to accept
For your products or services. However, it does not mean that it has to be paper dollars. You can also accept electronic dollars as payment.
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According to the Federal Reserve System, there is no federal statute mandating that a private business, person or organization must accept currency or coins as payment for goods or services.
The Federal Reserve System also states that businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.
Your state or locality may require your business to accept cash payments. State laws on cash acceptance policies supersede federal rules.
If your state has a law that requires you to accept cash payments, you must follow the rules. If you fail to comply with your state or local cash-accepting rules, you could face penalties and fees.
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Some states limit restrictions that businesses can impose. For example, many states require private impound lots to accept cash from individuals trying to retrieve their vehicles.
With cash passing through so many hands, it’s no secret that businesses large and small have been worried about accepting cash during COVID-19.
Many businesses are refusing cash during COVID-19 as a precaution to protect both employees and customers. And, some businesses don’t accept cash because of the nationwide currency shortage.
So, is it legal for businesses not to accept cash during COVID-19? The short answer: yes. As mentioned, there is no federal law that requires private businesses to accept cash as payment. Ultimately, it is up to the business to decide whether or not they want to accept cash payments (unless there is a state or local law that says otherwise).
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As a small business owner, you can choose a payment policy that fits your needs. You may accept cash but have some restrictions (eg, no bills over $20). Or, you may choose to refuse money. Before you decide, check out the pros and cons of accepting cash below.
If you plan not to accept cash at your business, post your policy and make sure it’s visible to your customers.
Post your policy on your front door, on your website, at your store, and anywhere else customers will see it before making a purchase. In your policy, include the types of payments you accept (eg checks, credit cards, etc.). You can also include the reason for your policy (eg, “Due to COVID-19…”).
If you don’t accept cash from customers, offer a variety of payment options so that customers can pay you without cash. Consider accepting:
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Make sure you also have a convenient payment process. Check that your payment processing equipment is up to date and working properly.
Credit card processing fees can be expensive. Typically, you pay a credit card merchant a percentage of each sale made by credit card. You may also have to pay for setup and equipment.
Before offering other payment methods, do your due diligence and find out what costs and fees are associated with them.
Do you plan to accept cash payments from your customers? Excellent! Keep these three things in the back of your mind.
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As a business owner, you must keep records of every transaction, including cash sales. If you accept paper invoices from customers, treat cash transactions as you would any other type of transaction.
For every cash sale you have, make a general ledger entry in your books. Note what the sale was for, the date of the transaction and the amount. Keep supporting documents such as receipts for your records in case there are discrepancies.
Record your cash transactions regularly to keep your books up to date and to catch errors early.
Leaving too much money in your cash register(s) can be dangerous. Instead of letting money pile up in your records, make deposits.
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To make cash deposits, open a business bank account to use exclusively for company transactions. At the end of the period (eg, day, week, etc.), deposit the cash your business earned from sales.
A business bank account helps keep your cash safe. Not to mention, it gives you an extra record of sales.
In addition to making frequent deposits, you should also have a safe way to store your cash until you can make relevant deposits. Consider investing in a safe deposit box to store excess cash from the register until you can deposit funds. And only allow certain employees access to the safe (eg, administrators).
To protect your business from counterfeit bills, avoid accepting larger bills (eg $50 or $100). Large bills are the most common bills.
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To avoid unknowingly accepting fake invoices, consider creating a policy on the type of invoices your business will accept. For example, maybe you will only accept $1, $5, $10 and $20.
In addition to setting up a policy, you can check bills with a special counterfeit money detector pen. These pens are cheap and show you whether or not an invoice is fake.
Learn how to tell if money is fake. Then you can also train your team to be alert for suspicious invoices (eg, check for watermarks) and what to do if they receive one.
Accepting large bills can also cause problems when it comes to returning change to customers. If you accept large invoices, be prepared to provide customers with the appropriate change.
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Need a simple way to keep track of your business’s transactions? Patriot’s online accounting software is affordable and easy to use. In addition, we offer free US-based support. Try it for free today! Cities And States Say No to Cashless Stores Washington, D.C., is the latest city to consider banning businesses from rejecting cash. Opponents of cashless stores say they discriminate against poor, homeless and undocumented people.
A sign alerting customers that cash is not accepted at a store in San Francisco last year. The city later banned businesses from accepting cash. Jeff Chiu/AP hide caption
A sign alerts customers that cash is not accepted at a store in San Francisco
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