Payments and the concept of legal tender

Release date
21/09/2015
Reference
Vol. 78. No. 6. September 2015
Author
Nick McBride
Main file
The Reserve Bank occasionally fields queries from the public about the rules of legal tender. Typically, we find, these people have had a dispute with a seller over payment methods, for instance, a seller may insist on EFTPOS while the customer wants to use cash. Other disputes, we find, also occur when two types of currency are circulating. This last happened in 2007 when there was a brief period during which the old-style cupro-nickel 10, 20 and 50 cent pieces were co-circulating with the new plated steel coins. At that time, there was some public discussion about consumers’ rights when sellers refused to accept the old coins in payment. From late 2015, new Series Seven banknotes will be co-circulating for a while with the older Series Six notes. The old notes will remain legal tender, and it seems timely to publish a brief description of what ‘legal tender’ actually is, and how it works.