Having the right change is wrong

cash is brokenNine years on from the tragic bombings that rocked London, Transport for London (TfL) have decided that the time has come to give a better reason for 7 July (7/7) to be remembered – the day that London’s buses went cashless (here).

The success of London’s Oyster contactless ticketing system (here) and the introduction of contactless banking card acceptance on buses just over a year ago (here) has increased the fall of cash usage below the 1% of passengers mark and allowed TfL to become a cashless transit system at the point of usage. The transit authority believes that it will gain significant savings by no longer accepting cash – particularly cash handling and service efficiency gains. This has been made possible by the legal tender laws in the UK and the right for a merchant to decide how they wish to be paid.

Contrary to popular belief, shops or individuals do have the right to refuse payment in coins or notes, even legal tender ones, before a transaction has taken place, and to demand payment in whatever form they choose. However, when the debt has already been incurred (which, under the concept of ‘invitation to treat’ the vendor has already supplied a good or service prior to payment), then they are obliged to accept settlement of that debt in legal tender currency up to the amount authorised in law (which in the case of £1 coins, is unlimited). – Chard legal information

This is in stark contrast to the legal tender recommendations created for the Euro currency (here). While these recommendations are not European law (i.e. not a Regulation or Directive), they would be taken as the start point for any case of dispute that was taken to the European Court. Primarily of interest has to be the opening point of the recommendations:

Where a payment obligation exists, the legal tender of euro banknotes and coins should imply:  (a) Mandatory acceptance: The creditor of a payment obligation cannot refuse euro banknotes and coins unless the parties have agreed on other means of payment.
– ELTEG recommendation number 1

Which means that potentially a customer could insist on paying with Euro cash even when the merchant states that they no longer accept it, as refusal of cash requires agreement of both parties. To date, examples such as Dutch retailer Van Gastel (here [in Dutch]) are meeting with strong public acceptance, but can you imagine the same thing happening in more cash-loving markets such as Germany?

So it means for now is that we have a British example of the future analogue cash-free society and there at least is seems that the law is on the side of progressive electronic payments and the gradual removal of the criminals’ friend – cash – and of course TfL no longer spending tax payer’s money on stickers saying ‘Correct change only’.


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