Can a Business Refuse Cash?
When operating your business, you must be aware of the different legalities relating to cash. You may have even thought, ‘can a business refuse cash?’ before. Indeed, more and more businesses are choosing to prioritise card payments over cash, which raises a few notable questions. Namely: can a business refuse to accept cash payments?
If this is something you have been wondering about, then don’t panic! Our team is on hand today to help you find out more about the legalities surrounding cash payments and whether your business is legally allowed to refuse cash – and what the implications might be if you do.
The Drawbacks of Accepting Cash Payments for Businesses
Cash payments can come with a few notable limitations for businesses, which has led to a growing number of firms turning down cash payments and requesting that individuals pay by card instead.
Not only can they make it harder to monitor transactions and keep records, especially for small businesses, but cash payments can have other drawbacks too. Cash payments require the business to cash them into the bank, taking time away from core business activities. And, as an additional point, there is also the risk that keeping cash on the business premises could put the business at greater risk of getting robbed, representing massive losses for the firm and posing a security concern for the business’s staff members.
These complications were already in place before the arrival of the Covid-19 pandemic. However, a new drawback of cash was also brought to light the pandemic: the risk for cash to transmit disease. Indeed, while it should come as no surprise that cash isn’t exactly sanitary, what with it being handled by a massive number of people, the pandemic brought this fact to the forefront.
And, with even the government encouraging customers to use contactless payments instead to limit the transmission of the disease (which has led to increases in the maximum contactless limit), there is no doubt that the Covid-19 pandemic has been a further nail in the coffin for cash payments
Can a Business Refuse Cash?
Can your business refuse to accept cash payments? This is a question that a growing number of businesses are asking, and the justification is understandable.
At present, there is no legal requirement for a business to accept cash payments. This means that businesses can refuse cash payments from customers – and a growing number of businesses are taking this stance. Indeed, as explained by Which?, one in three people attempting to pay with cash during the Covid-19 pandemic have had their payments refused. Of these transactions, substantially the most significant proportion (holding a total of 49%) was seen for grocery purchases and cleaning products, followed by leisure activities which represented 24% of refusals.
The Drawbacks of Refusing Cash
As we’ve clarified here, there is no legal requirement for your business to accept cash payments at present, and if anything, the pandemic has encouraged businesses to take this stance where possible. However, there are a few points you should be aware of before implementing a cashless approach to your business.
Firstly, this could lose your business sales. Understandably, if a customer only has cash and can’t pay by card – be it because they do not hold a card or simply forgot their card – then refusing their cash payment will likely result in a lost sale. This is particularly prominent among young customers; although some providers now offer cards for children funded by parents through pocket money, the majority of children still pay with cash. If your business sells products to children – for example, a corner shop close to the local school – you could face a lot of lost sales in this manner.
What’s more, there’s also a reputational blow associated with refusing cash payments. Indeed, a growing number of people are becoming concerned about the possibility of a cashless society, and the Which? Report we already mentioned also clarified that customers often felt frustrated, anxious, and embarrassed when their cash payments were rejected.
so… can a business refuse cash?
If your business has been considering refusing cash payments, you can take comfort that this is legal and allowed. However, your business may have ramifications if you refuse cash payments, and being aware of these is crucial before you implement the change. As such, before refusing cash payments, you should ask yourself: can my business handle the potential consequences?
Other useful links from our knowledge centre:
How to Identify A Great Business Idea
Register Your Company Name
9 Ways to Grow a Small Business
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