Payment Accepted

As we are seeing more and more businesses cease the practice of accepting cash as a form of payment, there is a question about whether this practice in lawful in the Texas lodging context.

There is no specific Texas or federal law that precludes a hotel from having a policy to refuse payment in the form of cash, provided the policy is established and communicated to the guest before the guest actually stays at the property (i.e. before the guest incurs a “debt” to the hotel).

Here is an excerpt from the U.S. Dept. of the Treasury’s guide on point:

“…The Coinage Act of 1965, specifically 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 statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.”

Hotel’s can Choose

While there is no state law on point, a hotel should exercise caution if it chooses to forego the acceptance of cash entirely.  Because many individuals without access to a credit card or bankcard are minorities, there could be concerns raised that the hotel’s refusal to accept cash is a pretext for racial discrimination.  This becomes particularly more acute as the overall portion of hotel guests paying for lodging with cash continues to decline.

Recently, a passenger lost a lawsuit against American Airlines when the passenger alleged that American Airlines was discriminating against him for refusing to accept cash for the purchase of in-flight food and beverages.  In that airline case, AA had the defense that it was not stopping the cash-paying passenger from flying; American Airlines was merely refusing to accept cash for an ancillary service while onboard.

As a contrast, lodging is certainly more essential than buying food or drinks on a flight, and the potential harm of a discrimination claim is much more poignant.

Final Word

To put this succinctly: Refusing to accept cash would not strictly violate a state or federal law. However, doing so could present the hotel with at least some minimal risk of a lawsuit alleging racial or some other form of discrimination.

If you have questions, please reach out to us at 512-474-2996.