Ask Finder: Can businesses legally refuse to accept cash?

Does "legal tender" mean you can always pay with notes and coins?

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Hey Finder, I've noticed a lot of businesses are now only taking payments via credit card. Aren't they required by law to accept cash as legal tender?
Thanks, Cash Collector

The belief that cash is "legal tender" and can't be refused by any business is very widespread. However, it's simply not true in Australia. Businesses can choose to accept payment in whatever form they like.

The Reserve Bank of Australia covers off this topic succinctly on its website:

It appears that a provider of goods or services is at liberty to set the commercial terms upon which payment will take place before the 'contract' for supply of the goods or services is entered into. For example, some vending machines, parking meters and road toll collection points indicate by signs that they will not accept low denomination coins. Some road toll collection points indicate that they will not accept any cash at all. If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment.”

Guidance sheet, RBA

While that example talks about coins, this is equally true of credit card or EFTPOS payments. We've seen a big surge in businesses only accepting card payments during the coronavirus pandemic. And it's long been the case that airlines that let you book online require you to use a credit card or debit card to make that payment.

It's true that most businesses will choose to take as many payment options as possible, to maximise their potential customer base. But there's no legal requirement for them to take cash.

In Australia, laws regarding currency apply nationwide, no matter which state you live in. That's a different scenario than the US, where some cities and states do have laws that make it illegal to refuse to accept cash. On social media, I've seen people share US examples and suggest that this also applies in Australia. That's not correct.

An important related law: businesses are allowed to impose a surcharge for payments made by credit card, but that surcharge can't exceed the actual cost of processing. Of course, many businesses choose to charge nothing; you can use our list of Fee-Free Shops to find retailers that accept cards without a surcharge. We've also got tips on how to minimise or avoid those surcharges.

One other thing. Even businesses that choose to accept cash can refuse to accept large numbers of coins. No business is obliged to take more than $5 in 5 cent, 10 cent, 20 cent or 50 cent coins, more than $10 in $1 coins or more than $20 in $2 coins. This video explains the rules further:

Ask Finder is a regular column where Finder's expert writers answer your questions. All rates and fees are correct at time of publication and we only give general advice. Got a question for Points Finder? Hit us up on Facebook.

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