The Legality of Denying Legal Tender

Winter 2026

Isabella Terranova

Edited By: Alexander Christofi

Today, fewer American consumers are batting an eye to the words: “We do not accept cash.” The invention of credit cards, electronic payment methods, and the digitization of life in general has bred a culture that is predominantly cashless. The COVID-19 pandemic only added fuel to the cashless fire, as many retailers discouraged or even banned cash to reduce germ transmission. In 2021, the current market leader in point-of-sale systems, Square, reported 15% of stores in the United States were exclusively taking paperless payments [1].

Most Americans appear relatively unbothered by the growing shift away from cash, as many have transitioned from using paper money to more convenient methods of payment. According to the Federal Reserve, as of 2024, 35% of all payments were made using credit cards, 30% using debit cards, and 23% using remote options such as Apple and Google Pay [2]. Cash users, feeling left behind, are now questioning the legality of denying legal tender.

Much of their skepticism stems from the words on the back of the dollar bill: “This note is legal tender for all debts, public and private.” Because all dollar bills are legal tenders, the natural conclusion would be that denying officially recognized currency is illegal. After all, if dollars are acceptable currency for all debts, public and private, how can a business refuse your hard-earned money? 

It turns out that the Constitution never specifies whether or not a private business is required to accept cash. Article I, Section 8, Clause 5 of the Constitution states that “[The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures” [3]. While Congress is responsible for producing and controlling our tangible currency, federal law does not explicitly state that physical money must be permissible for all transactions. 

However, businesses that deny cash payments deny service to anyone without a bank account or the necessary technology. These policies disproportionately affect the poor, homeless, and elderly of America, who are either unable, or less inclined, to use alternative payment options. 

Additionally, in a progressively technological world, anxiety regarding government and third-party surveillance is growing. Those who prefer the anonymity of cash fear the State's and big businesses’ ability to track users in a computerized market.

Though most sellers of essential goods (such as groceries and gas) are still accepting cash, the trend toward total cashlessness is growing. To avoid discrimination and protect our right to privacy, federal action is required to mandate cash acceptance in private business settings and maintain freedom of choice in the marketplace. 

Discrimination against the world’s poor is just one sinister element of the cashless movement. Surveys from the Federal Reserve show that an overwhelming 90% of U.S. consumers still plan on using cash in the future, which begs the question: how has cashlessness become a cause for concern if most people are still using it [4]? Majority of the American public has at least one cash alternative available to them, considering that 74% of U.S. adults have a credit card [5]. For the 6% of America that is unbanked, it is a different story. Even though 32% report using specific check cashing services and money orders that do not require having a bank account, the remaining 68% of the unbanked are reliant on cold hard cash [6]. 

Why don’t the unbanked become banked? Many avoid banking due to intense financial pressure. Opening a bank account comes with fees, risks, and often a minimum balance is required. For families with an average yearly income of less than $25,000, 22% are unbanked [7]. Others cannot open a bank account due to lack of proper identification - an impediment for much of America’s homeless population. The homeless cannot submit the proof of residence required for a government-issued ID without facing complicated paperwork and bureaucracy [8]. 

Additionally, fear of fraud, confusion using smartphones, and an affinity for tradition lead many elderly to be dependent on cash. An estimated 2.4 million American seniors use cash exclusively [9]. Not everyone can swipe their problems away. 

For people who depend on cash, society without it would be devastating. San Francisco is a primary example of a metropolis in which adopting the more fashionable cashless business model had disastrous effects on the unbanked, due to the city’s high homeless population. The reliance on digital currency was so catastrophic for the unhoused that the San Francisco Board of Supervisors prohibited retailers from going cashless in 2019. San Francisco leadership held firm on this position until 2026, when they recently stated that the law would be under review for repealment [10]. 

Even if we were able to equip everyone with credit and debit cards, pertinent issues for the public would still remain. What many of us are either earnestly or willfully ignorant to is the reality of surveillance that accompanies the growing digitization of the world. In 2013, Edward Snowden, a former employee of both the National Security Agency (NSA) and Central Intelligence Agency (CIA), leaked classified documents revealing the government’s global surveillance agenda. His findings, which are detailed in his memoir Permanent Record, expose the State for tracking ordinary civilians’ phone calls, internet usage, private messages, and electronic purchase history [11]. 

Snowden exposed the unsettling truth that practically every digital transaction is recorded and accessible to our government. Intelligence agencies used the events of 9/11 as justification for fully monitoring Americans, claiming to be searching for foreign and domestic connections to Al-Qaeda. This was executed various ways, but chiefly via the NSA’s PRISM program, which Snowden denounced for its access to every intimate detail of the general public. Despite the freedom from unlawful search or seizure granted to us by our Constitution, our leaders collect our data and package it as an effort toward national security [12]. 

Snowden’s discoveries have led to some changes in the law, but they have ultimately been unfruitful. Despite the USA Freedom Act of 2015, which allegedly prevents the government’s bulk collection of phone records, the FBI was responsible for conducting at least 3.4 million unwarranted searches on Americans’ communications [13]. Consider the government’s lack of transparency when evaluating promises of resolution through new legislation. 

Just like every other metric of personal information, financial data is of keen interest to the State. The House Judiciary, a sub-group established by the US House of Representatives, released a 2024 report detailing government collusion with companies such as “Barclays, U.S. Bank, Charles Schwab, HSBC, Bank of America, PayPal, and many others” to farm our data [14]. Why does this matter? With our information and purchasing history, leaders have the power to potentially exclude those who are deemed enemies of the State from commerce. The government has already encouraged cashless business before, with the CDC advising retailers to refuse cash during the COVID-19 pandemic. Is a fully cashless future, which risks enabling total surveillance of the population, really so hard to imagine?

Protecting the element of choice is crucial in the marketplace. A bill with the power to preserve cash has been introduced to Congress, although it has yet to pass. The Payment Choice Act of 2025 reads as follows:

This bill requires retail businesses to accept cash as a form of payment for on-site sales of $500 or less and it prohibits them from charging cash-paying customers a higher price compared to customers not paying with cash. Businesses covered by this bill are those engaged in the business of selling or offering goods or services at retail to the public that accept in-person payments at a physical location [15]. 

If this act were to make it through the House and the Senate, cash would be federally safeguarded. Although it would be beneficial to make the existing cashless businesses accept paper bills, the true worth of the Payment Choice Act lies in its preventative ability. Cashlessness may not be in full force now, but considering the direction we are headed with technology, its disappearance is inevitable. According to an Oxford study, 85% of business owners across the world expect their country to be cashless within a decade [16]. Therefore, the Payment Choice Act would amend the existing discriminatory and surveillance issues that cashlessness causes, while also defending legal tender for the future. 

Enforcing the Payment Choice Act, however, does not come without hiccups. One of the most compelling reasons for allowing businesses to refuse cash is the risk of robbery. Businesses in high crime areas, such as San Francisco, sometimes go cashless to avoid having their cash registers stolen by thieves [17]. However, the Payment Choice Act allows for certain businesses to use machines which create prepaid debit cards in exchange for cash, so long as the machines do not obtain personal information from the user or come with a fee [18]. Granted, cash would still technically be on the premises, but these ATM-like machines would be much harder for a thief to access than the traditional cash register. 

Theft and fraud are not eradicated when businesses go cashless. Perhaps cashlessness slows crime for businesses themselves, but consumers face a host of risks when cash is not an option. For example, gas stations are frequently targeted by thieves who replace card-scanners with skimmers that collect users’ sensitive financial information [19]. Others say a cashless society is preferable because it complicates the purchase of illegal items, as digital transactions leave a paper trail. For example, cash allows drug dealers to conduct their business invisibly, leaving no evidence behind. But a society that monitors transactions is one where not just the criminals, but everyone, is surveilled. 

Other cashless proponents suggest that businesses save when money-handling costs, such as paying for the labor to balance registers or buying coins, are eliminated [20]. Despite this, operational costs are not exclusive to businesses that accept cash. In fact, using credit cards and other digital means of payment actually deprive businesses of their full profit. Banks and other digital payment companies exact a fee on every transaction made with their technology, known as the interchange fee [21]. Both cash and non-cash options alike cause businesses to lose a small fraction of their gains, rendering the argument that non-cash options are less expensive for retailers much less convincing. 

As technology increasingly permeates our lives, many Americans are leaving traditional forms of payment behind. For Americans who are low-income, elderly, or homeless, cash is often their only option. And for those aware of government surveillance and seeking to avoid having their purchases tracked, cash is a safe and anonymous choice. Though businesses primarily justify going cashless with the fear of robbery, forcing everyone to use technology only shifts theft over to the cyber realm. While cashlessness has the advantage of protecting business owners and employees, one must remember that workers, and even business owners, are consumers first. 

Despite cash being considered legal tender, private businesses currently have the jurisdiction to refuse it. This could change if the Payment Choice Act passes, yet it has only been introduced to Congress and awaits approval from the House. By passing this bill, the government could communicate that consumers’ freedom to privacy and choice are rights worth maintaining. But it is not in the State’s best interest to relinquish its ability to monitor us, as having our information is more useful to its purposes than not. Our government has shown us time and time again that it wants to expand its control, and utilizing financial data is only one way that it could potentially police the lives of average citizens. Awareness of these issues is key to encouraging civic outreach, which could help usher the bill into practice. As previously mentioned, 90% of Americans plan on using cash in the future [22]. The majority of Americans would greatly benefit from seeing cash federally protected, especially considering our society’s descent into technocracy. If the Payment Choice Act does not pass, the denial of cash will become standard, and our freedom as consumers will effectively end. Welcome to the end of customer service, and the beginning of customer servitude. 

References

1. Square. “Making Change: Cashless Payments & the Pandemic.” Square. Accessed February 26, 2026. https://squareup.com/us/en/press/making-change/2020/1. 

2. Fed. Reserve Fin. Servs., 2025 Findings From the Diary of Consumer Payment Choice (2025), https://www.frbservices.org/news/research/2025-findings-from-the-diary-of-consumer-payment-choice. 

3. U.S. Const. art. I, § 8, cl. 5.

4. Fed. Reserve Fin. Servs., 2025 Findings From the Diary of Consumer Payment Choice.

5. Drechsler, Itamar, Hyeyoon Jung, Weiyu Peng, Dominik Supera, and Guanyu Zhou. “Why Are Credit Card Rates so High?” Liberty Street Economics, Oct. 16, 2025. https://libertystreeteconomics.newyorkfed.org/2025/03/why-are-credit-card-rates-so-high/.

6. Board of Governors of the Federal Reserve System, Economic Well-Being of U.S. Households in 2024: Banking and Credit (May 28, 2025), https://www.federalreserve.gov/publications/2025-economic-well-being-of-us-households-in-2024-banking-and-credit.htm.

7. Id.

8. U.S. Gov’t Accountability Office, Homelessness: Barriers to Obtaining ID and Assistance Provided to Help Gain Access, GAO-24-105435 (Feb. 7, 2024), https://www.gao.gov/products/gao-24-105435.

9. “How to Make Payments More Inclusive for Older People.” | The Payments Association, Apr. 18, 2023, https://thepaymentsassociation.org/article/how-to-make-payments-more-inclusive-for-older-people/. 

10. Balakrishnan, Eleni. “‘Ethos of Inclusivity’ No More: S.F. Looks to Repeal Law Requiring Stores to Accept Cash.” Mission Local, Feb. 13, 2026. https://missionlocal.org/2026/02/sf-cash-law-repeal-unbanked/. 

11. Snowden, Edward. Permanent Record. United States: Author’s Republic, 2019. 

12. Snowden, Permanent Record.

13. Fixing FISA: How a Law Designed to Protect Americans Has Been Weaponized Against Them (2026), https://www.congress.gov/event/118th-congress/house-event/115812/text.

14. H. Comm. on the Judiciary & Select Subcomm. on the Weaponization of the Fed. Gov’t, New Report Exposes Massive Government Surveillance of Americans’ Financial Data, Press Release (Mar. 6, 2024), https://judiciary.house.gov/media/press-releases/new-report-exposes-massive-government-surveillance-americans-financial-data.

15. H.R.1138 - 119th Congress (2025-2026): Payment Choice Act of 2025, H.R.1138, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/house-bill/1138.

16. November 2023. “Protiviti-Oxford Study: Execs See Cashless Future, Expect Big Disruption from Digital Currency.” Vision by Protiviti, Nov. 2023. https://vision.protiviti.com/insight/protiviti-oxford-study-execs-see-cashless-future-expect-big-disruption-digital-currency. 

17. Balakrishnan, “‘Ethos of Inclusivity’ No More: S.F. Looks to Repeal Law Requiring Stores to Accept Cash.”

18. “Debit Card Dispensing Machines for Cashless Operations.” REDYREF, Oct. 6, 2025. https://redyref.com/debit-card-machines-going-cashless/. 

19. Skimming, FBI (last visited Mar. 2, 2026), https://www.fbi.gov/how-we-can-help-you/scams-and-safety/common-frauds-and-scams/skimming.

20. Pamela Paul, The Cost of Going Cashless, N.Y. Times (Nov. 13, 2022), https://www.nytimes.com/2022/11/13/opinion/cashless-pay-problem.html.

21. Paul, The Cost of Going Cashless.

22. Fed. Reserve Fin. Servs., 2025 Findings From the Diary of Consumer Payment Choice.