Can a Business Refuse to Accept Cash in a COVID Environment?

Introduction

Have you ever visited a provider of goods with cash and have them refuse to take it stating, “we only take payWave,”? Well I have visited several bars in Adelaide and had this happen to me. It spurred me onto investigating whether a provider of goods can legally refuse cash as the customer’s legal tender.

Legal tender

The term Legal Tender indicates a form of money that is recognised by the courts of Australia as a satisfactory form of payment.

Both Australian coins and banknotes are legal tender in Australia as per section 36(1) of the Reserve Bank Act 1959. However, there are restrictions on the use of coins. For example, while 1 cent and 2 cent coins have been withdrawn from circulation, technically they are still legal tender as of 2021. This means that you can pay for goods with these coins as long as it does not exceed 20 cents.

Refusal of Legal Tender

In Australia, banknotes and coins are not necessary for the transaction of goods. As you well know, it can be done through payWave or by cheque.

According to the Reserve Bank of Australia the, “refusal to accept payment in legal tender banknotes and coins is not unlawful.”

Each goods provider can set the commercial terms before the contract to supply the goods is made. That means that they can state that they will not accept a certain form of currency.

For example, parking meters can indicate that they will not accept 50 cent coins. The reason they can get away with this is because if the parking meter specifies that another form of payment can be made, which they usually do, and that option is specified before the contract between the provider and the customer is made, the parking meter does not have any obligation to accept the legal tender of 50 cents as payment.

This principle extends to any other transaction between a goods provider and their customer.

Limitations

There are limitations to this rule, such as if there is an existing debt and legal tender offered by the debtor and it is refused by the creditor and no mean of payment was specified previously; the debtor can take the creditor to court, and this can strip the creditor from enforcing the use of another form of payment than the debtor can offer.

Conclusion

There is no exemption to the rule during the time of the COVID-19 pandemic. So, to cut a long story short, if you go to a bar and they have a sign that says, “only payWave available,” they have every right to refuse any other form of payment.