Can a Business Legally Refuse to Take My Cash?

Question: The other day, I ordered takeout from a restaurant. When I got there, they said they only take credit or debit. I didn’t have any cards on me, so I just left and found another place that would take my money. But it got me wondering, is it even legal for businesses not to take cash?

– Pete in Oregon

Howard Dvorkin, CPA, and Debt.com chairman responds…

For those of us beyond a certain age: Remember going to the grocery store and being asked, “Paper or plastic?” Once you made your choice, the clerk would pack your food in paper or plastic bags.

These days, it’s all plastic – and that also describes the way many businesses operate. They take credit cards (plastic) and not cash (paper). And it’s totally legal – in most places.

Federal regulations don’t force businesses to accept cash or credit cards

There’s no federal law that says businesses must take cash. As the Federal Reserve says…

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.

I bolded that last part because some states and cities have banned businesses within their borders from going cashless. For example, Massachusetts passed such a law back in 1978. New Jersey did it just last year.

San Francisco and Philadelphia also force stores to accept cash. Politicians in New York City and Washington D.C. have floated the idea during the pandemic.

In fact, the pandemic has compelled many Americans to rethink their relationship to cash. This headline in the Los Angeles Times says it all: In a pandemic, no one wants to touch it. Why cash has become the new Typhoid Mary.

A personal conflict

Since these headlines have started appearing, people have asked me what I think about states and cities making it illegal to go cashless. I admit I’m conflicted.

On the one hand, I’m allergic to governments overregulating businesses. Many of those regulations are excellent, especially in regards to fair business practices, consumer protections, and equal treatment of all customers. I’m less convinced by rules detailing how businesses must accept payment.

On the other hand, I love cash. In my second book, Power Up, I sparked a minor controversy when I urged every American to give up their credit cards every so often…

Learning to live without a credit card is an integral part of financial empowerment. The lessons you discover will add to your building blocks that will eventually lead to your financial independence. Those who don’t use credit cards take money much more seriously than credit card users. The act of physically handing over the dollars to a cashier or waitress generates a feeling of loss. The money is gone.

When I became a CPA nearly three decades ago, it was hard to get a credit card – and if you told anyone that someday you could pay for items using a phone in your pocket, they’d call you crazy.

So, I predict in less than a decade, Pete will be asking me, “Hey Howard, can a business really refuse to take my credit card and force me to pay with my phone?”

It will be this generation’s “paper or plastic” moment.