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It is legal for a retailer/store or other business to refuse $50 & $100 bills or other legal tender, e.g. pennies?

Here in the USA, it seemed to be becoming more and more common for retailers (both small and large alike) to say something like "no bills larger than $20 accepted". My question is, is this really legal? Can businesses really make such a demand? Can they reject a hundred dollar bill as a payment of debt? I understand why they want to do it but can they really get away with it?

My line of thought is that currency is printed and put in circulation so that it is easy for people to do business with instead of carrying sacks of gold or bartering with chickens and sacks of corn. The American dollar is not backed by gold anymore anyway (it has been floating freely since 1971 on currency markets). FDR actually confiscated gold coins in 1933. The USD is only backed by full faith and credit of the US government today and it is designated as legal tender in payments of debt.

I understand that if an individual doesn't want to take cash at all for a transaction, that's fine. He can rightfully do so and in that case he would reject all coins and currency. But what about for a business, especially for a large scale business like a chain with a bunch of stores doing hundreds/thousands of transactions everyday like selling burgers to the public? And it seems even stranger that they are okay with some bills like the smaller bills but they have a problem accepting $100 bills. So if I walk into a taco joint and they accept small bills and coins, can I insist that they accept my $100 bill as well?

Just to be clear, I am not asking for legal advice or anything. Its just for personal curiosity. Is it the case where this practice of accepting small bills and rejecting large bills is perfectly legal? Or is it the case where this practice may be murky and no one knows until this ends up in the Supreme Court one day? Or is it the case where retailers CAN get into trouble one day but no one has bothered to take them to courts yet and the retailers are just waiting to see how long they can get away with this practice?

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    @JoeTaxpayer The other question was tagged 'Canada' (although, there is an answer relevant to the United States ... hmm.) I think we can leave this one open since it is specific to the United States.
    – Chris W. Rea
    Dec 13, 2012 at 13:38
  • @ChrisW.Rea - other question had two answers for 2 US, 2 for Canada. No issue, interesting answer here as well.
    – JTP - Apologise to Monica ♦
    Dec 13, 2012 at 19:03

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Can they reject a hundred dollar bill as a payment of debt?!

No. A creditor cannot refuse payment in cash, whatever denomination you use.

HOWEVER, when you're buying stuff - you don't owe anything to the business owner. There's no debt, so the above rule doesn't apply.

As long as there's no debt in existence, the matter of payment is decided between two parties based on the mutual agreement. The demand not to use large bills is reasonable in places like 7/11 or taxi-cab that are frequently robbed, or at a small retailer that doesn't want to invest into forgery detection and fraud prevention.

So the answer to this question:

Is it the case where this practice of accepting small bills and rejecting large bills is perfectly legal?

Is yes.

You can find the full explanation on Treasury.gov, including code references.

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  • But if I ate a donut or took a ride in a taxi, don't I owe him a few dollars? Isn't that debt? I owe him some debt and I want to pay him back using a hundred bill I have and he won't take it.
    – Fixed Point
    Dec 13, 2012 at 6:41
  • @PrinceAli usually, you first pay then you get donuts. Especially at taco/burger joints.
    – littleadv
    Dec 13, 2012 at 7:24
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    Is that all there is to it then? Was the payment made first or did I get the product/service first? So this means that anytime where I consume first, cash (any denomination) cannot be refused then?
    – Fixed Point
    Dec 13, 2012 at 7:28
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    @PrinceAli generally yes. In a restaurant, where you're seated and served prior to payment, they cannot claim that you refuse to pay if you give them a $100 bill that they don't want to take. That would be their problem. But in McDonalds- they won't serve you food unless you pay in an accepted method.
    – littleadv
    Dec 13, 2012 at 7:29
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    @FixedPoint The taxi has to take your $100 bill, but it doesn't have to give you change.
    – Mike Scott
    Dec 30, 2016 at 19:20

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