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By Dylan Olivier | Candidate Attorney | Mooney Ford Attorneys

The introduction of cashless transactions into society, and the electronic transfers of funds associated therewith, has fundamentally reshaped the way in which purchase and sale agreements are facilitated on a day-to-day basis. Credit and Debit Cards have provided the average person with a pocket-sized bank account, allowing for an increased sense of convenience when tendering payment for goods and services, whilst concurrently mitigating the security risk of carrying around large amounts of cash.

Nowadays, one should be able to reasonably assume that your favourite grocer, convenience store, or any other business for that matter, is willing to accept cashless payment as a means of settling the respective transaction; and depending on where you live, some car guards even carry portable point-of-sale (POS) terminals. Welcome to the future…

Furthermore, seeing that almost everyone carries a smartphone today, major tech-corporations have jumped on the innovation-bandwagon by developing ways to integrate the facilitation of these electronic transactions into your mobile-phone’s user interface. The introduction of Apple Pay, Samsung Pay, and other digital wallets are rapidly becoming popular methods for everyday purchases. These mobile payment systems use near-field communication (NFC) technology to enable secure, wireless data exchange between smartphones and payment terminals. By tapping their phone at compatible terminals, users can make purchases without needing physical cards. This offers greater speed and convenience, while biometric authentication methods like fingerprint or facial recognition enhance security and prevent unauthorized transactions.

Although these cashless methods are extremely efficient by providing proof of payment almost instantaneously, whilst also negating the need to provide the customer with change, one begs the question; is it legal for companies to only accept payment via bank card and other means of electronic payment?

In light of the above, one needs to consider the concept of “legal tender”, which may be summarily understood as the recognised form of money that must be used within a particular country or nation to settle debts. It is money that cannot legally be denied in the settlement of financial obligations. Essentially, unless otherwise specified in the conditions of an agreement for a transaction, a creditor is obliged to accept legal tender when it is presented by the debtor in the settlement of their debts or obligations.

In terms of South African Law, more specifically the South African Reserve Bank Act, the forms of legal tender in South Africa are banknotes and coins issued by the South African Reserve Bank (SARB). The third form of legal tender in South Africa is Gold, however, seeing that most people don’t conduct their daily dealings with it, and for the sake of convenience, in this article we will focus on the legal tender of money.

You will notice that we have omitted to include bank or credit transactions above as a form of legal tender. This is because Card transactions represent a method of payment rather than an accepted form of money, and therefore are not regarded as legal tender. When a company accepts credit card payments, it is essentially signing a contract with the client, consenting to accept the credit card as payment. But unlike cash, which is required to be accepted by law, accepting cards is not a requirement for businesses. Unlike real cash, payments made with a card depend on banking networks, which involve third-party service providers.

This leads to an interesting legal consideration: in contrary to the above, are businesses legally allowed to only accept cash for payment?

Under South African law, businesses are fully entitled to decide to accept only cash as a means of payment for their goods and services. This entitlement is grounded in the principle of contractual freedom, which grants businesses the authority to establish and enforce the terms and conditions under which transactions occur. This means that a business has the discretion to set its own payment policies, including the decision to accept only cash. Provided that the business clearly communicates this policy to customers—such as through signage, at the point of sale, or within their terms of service—it can legally require cash payments without needing to accommodate other forms of payment, like credit or debit cards.

This flexibility is in line with the contractual nature of transactions, where both parties agree to the terms of payment. In South Africa, the legal obligation to accept payment extends only to legal tender for settling debts, but this does not mandate that businesses must accept all available payment methods in everyday transactions. Therefore, as long as businesses adhere to clear communication and do not violate any consumer protection laws or engage in discriminatory practices, they are within their rights to refuse non-cash payments and operate on a cash-only basis. This approach allows businesses to tailor their payment policies to their operational preferences and risk management strategies.

In conclusion, while cashless transactions have revolutionized daily financial interactions with their convenience and security, South African law mandates that only banknotes and coins are recognized as legal tender for settling debts. This means that businesses have the legal right to choose to accept only cash if they wish. Rooted in contractual freedom, this right allows businesses to set their own payment policies and require cash payments, provided they clearly communicate this to customers and comply with consumer protection laws. Thus, despite the growing prevalence of digital payments, businesses can legally opt for a cash-only payment system, aligning their practices with their operational preferences.

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