The right to pay cash
Many are wondering whether businesses may refuse cash payment and whether it is legal for them to accept card payments only. Under the Central Bank Act, banknotes and coins are legal tender. But what does this actually mean?
What does the law say?
Section 3-5 (1) of the Central Bank Act states that Norges Bank’s notes and coins are legal tender and furthermore, that no one is obliged to accept more than 25 coins of each denomination in any one payment. Beyond this, the Act does not elaborate further on what legal tender implies.
Section 38 of the Financial Contracts Act states that a consumer is in all cases entitled to effect settlement with the recipient of the payment in legal tender. “Consumer” means a natural person who does not intend for the good or service to be paid for to be used primarily in business activity. The enforcement of the provision on consumers’ right to pay cash is the responsibility of the consumer protection authorities.
In 2013, the Ministry of Justice and Public Security issued a statement of principles/interpretation of the provision of the Financial Contracts Act on this point (Norwegian only).
Norges Bank has concluded that the scope of this provision is still disputed and unclarified. In a letter to the Ministry of Finance on 31 January 2019, Norges Bank pointed out the importance of cash to an efficient payment system and that Section 38 of the Financial Contracts Act should be clarified:
- The scope of the provision should be clarified so that a consumer’s right to pay cash cannot be contracted away by standard terms and conditions at locations where goods and services are offered to the general public.
- Granting the King authority to issue a regulation to regulate the scope of the provision in cases of doubt should be considered, as well as making exemptions from the provision when warranted by special considerations.
- Failure to comply with the mandate should be subject to clearer sanctions, eg so that the Norwegian Consumer Ombudsman is granted authority to impose fines for violation of the provision.
Use of cash in connection with the Covid-19 pandemic
With regard to refusing to accept cash owing to infection risk in connection with the Covid-19 outbreak, the Bank refers to the assessments of the Norwegian Institute of Public Health (NIPH).
According to the NIPH, there are no indications that using cash as a means of payment represents a risk of spreading Covid-19.