Are Kentucky businesses legally required to accept your cash and coin as payment?
Cashless payments seem to be everywhere these days, and businesses have been eager to accommodate shifting consumer preferences.
The COVID-19 pandemic accelerated the trend, and in the years since, the convenience of digital wallets and tap-to-pay cards has made it stick. Looking at 2022 data, a report from the Federal Reserve Bank of San Francisco found cash accounted for just 18% of all payments that year.
For consumers who prefer to deal in cash, the push toward a cash-free society can be frustrating. Some may wonder, “isn’t this what paper money is for?”
To help us answer these questions, we asked Karen Ginn, an attorney and the advocacy director at Legal Aid of the Bluegrass, an organization that offers legal assistance to low-income individuals. Here’s what we learned.
Does federal law require businesses to accept cash for payments?
The short answer appears to be no.
As Ginn pointed out, the Federal Reserve has addressed this question before. It was also a common topic on social media in 2020, when the pandemic pushed many businesses away from cash payments.
“The Board of Governors of the Federal Reserve says there’s no federal statute mandating that a private business, a person or an organization must accept currency or coins as payment for goods or services,” Ginn told the Herald-Leader in a call, referencing the fed’s website.
“Private businesses are free to develop their own policies on whether to accept cash, unless there’s a state law that says otherwise,” Ginn said.
Does Kentucky law require businesses to accept cash?
Again, the answer appears to be no, given there have been attempts in recent years to enact that requirement in the Bluegrass State.
Former State Sen. Adrienne Southworth, a Republican who lost her primary in 2024, attempted to pass such a law at least twice during her time in office. In both cases, the legislation failed to move forward.
During the 2024 lawmaking session, Senate Bill 306 would have required a person, business or agency to accept cash in face-to-face sales and punish those who violate that requirement. Southworth introduced a similar bill in 2023.
No bills with titles relating to the acceptance of cash payments appear to have been introduced in either the Kentucky House or Senate during this year’s legislative session.
Reached by phone Thursday, Southworth told Herald-Leader the COVID-19 pandemic and a move by businesses to suddenly stop dealing in cash brought the issue to the forefront. That threatened to leave some groups of people behind, Southworth said.
“There are certain populations that are more prone to using cash as a rule than others,” Southworth said.
Indeed, research from the Federal Reserve shows that households with incomes less than $50,000 a year are more reliant on cash than wealthier households. The same is true for consumers age 55 or older.
Additionally, Rupp Arena moved to cashless payments for parking and concessions in 2022. Southworth said the inconvenience some fans faced helped inspired the legislation.
“You’re trapped in the stadium,” for several hours during a game, Southworth said. “If you want to get anything, it’s not like you can just go to a different one.”
What does it mean that cash is considered ‘legal tender?’
As explained by the Federal Reserve, “Section 31 U.S.C. 5103, entitled ‘Legal tender,’ states: ‘United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes and dues.’”
This means that U.S. money can be used as a valid form of payment for paying debts, taxes and other financial obligations, but as we’ve seen, not necessarily for goods and services.
Do you have a question about Lexington or Kentucky for our service journalism team? We’d like to hear from you. Fill out our Know Your Kentucky form or email ask@herald-leader.com.
This story was originally published June 5, 2025 at 4:45 AM.