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Are cashless stores the future?

  • Belgium
  • Retail

15-09-2022

In Belgium, we are developing towards a more digitalized economy, with digital payments being one of the key features. Since the 1st of July 2022, Belgian law requires undertakings to make at least one electronic means of payment available to customers in store. Does this imply that there is a possibility to set up a cashless store in Belgium? In other words: does an undertaking have the right to refuse cash payments from its customers?

 

Legal landscape

In principle, payment by means of cash (banknotes and coins, denominated in euro) cannot be refused in Belgium on the basis of the status of cash as legal tender (Art. 10 and 11 Council Resolution No 974/98 of 3 May 1998 on the introduction of the euro).

There are however exceptional grounds which could allow the refusal of cash payments in store.

Cash could be refused on grounds related to (a) the principle of good faith, in particular on objective criteria which are typically not contested by consumers such as set out in ((i)-(iv)), or (b) for anti-money laundering purposes ((v)). It is generally accepted that you could refuse cash payment in the following circumstances:

(i) if the amount of the banknote is not proportionate to the sales price or the average value of the product offered. As a reference, you may assume that the banknote is considered disproportionate if the amount to be paid is less than 50% of the value of the banknote used. If the limit of this criterium is respected, no prior information to the customer is required. E.g. a bakery will be able to refuse the purchase of a bread if the customer can only pay with a EUR 50 banknote;

(ii) in case of exceptional and temporary security reasons (e.g. one or more robberies or thefts at the premises or in the immediate surroundings). Customers should however be informed thereof in advance in a legible and unambiguous manner by means of posters displayed at the entrance of the shop and in the immediate proximity of the cash registers;

(iii) you have serious reasons to suspect that the banknote is counterfeit, in accordance with the "feel, look, tilt, compare" method recommended by the European Central Bank (the “ECB”);

(iv) a customer wishes to pay with a damaged banknote (e.g. a ripped banknote); and

(v) the payment in cash exceeds the maximum of EUR 3,000.

Although the above does not consist of an exhaustive list of grounds for refusal, refusing cash payment in other situations could be considered an unfair commercial practice capable of substantially distorting the economic behaviour of the average consumer concerned.

 

Arguments against cashless stores

Having the right to pay with cash still ensures a few important individual rights and freedoms.

• Cash ensures one’s freedom and autonomy. As the ECB puts it: “Banknotes and coins are the only form of money that people can keep without involving a third party. There is no need of any equipment, internet or electricity to pay with cash.

• Cash furthermore protects the fundamental right to privacy of one’s financial matters.

• It also ensures inclusiveness, in particular for socially vulnerable citizens.

The parliamentary preparations of the recent law relating to the requirement to accept electronic payments, explicitly state that it does not allow undertakings to refuse cash payments. It therefore refers to Communication 2020/592 of the European Commission (“EC”) which clarifies that euro banknotes and coins are the only legal tender. Note that parliamentary preparations are not legally binding in Belgium.

 

Arguments pro cashless stores

On the other hand, requiring shops to always accept cash payments could also be burdensome.

In general, electronic payments are considered (i) to be safer than cash (e.g. it is easier to steal cash and once it is stolen, it is difficult to track), (iii) to provide more security (e.g. avoiding counterfeit notes) (ii) to be more consumer-friendly (e.g. electronic payments validate automatically so the waiting line in front of the checkout will be less long), (iii) to be more transparent (e.g. easy tracing) and less expensive to administer.

More recently, a new legislative proposal on legally anchoring the obligation for undertakings to accept cash payments from consumers has not been adopted. One of the reasons the proposal was not adopted is that there is already a Communication from the EC which recommends accepting payments in cash. Nevertheless, in practice, each country applies its own rules and interprets European legislation in a different way. For example, in the Netherlands, there is no hard obligation to accept cash (under certain conditions). Therefore, it could also be claimed that the proposal was not adapted to not completely rule out the possibility that cash could be refused one day. The principle of good faith could evolve in the future, whereby consumers might accept that only electronic payments are available when the store clearly informs the customer in advance thereof.

 

Rules when accepting cash

We furthermore would like to remind you of two rules when accepting cash:

  1. Increasing the purchase price - when a consumer wishes to pay in cash - is not allowed; and
  2. Cash payments must be rounded up to 5 cents, meaning that 0.01 and 0.02 shall be rounded down to 0 cent; 0.03, 0.04, 0.06 and 0.07 shall be rounded up to 5 cents; and 0.08 and 0.09 shall be rounded up to 10 cents.

At this stage, cash is still seen as a primary payment method which cannot be refused. In practise however, we note that we are evolving to less cash payments (as a consequence of COVID-19; due to safety purposes; ATMs being removed, etc). Hence, one day cashless stores might become an acceptable practise in Belgium.

 

If you have any queries about this topic, do not hesitate to reach out. Our team from the Company Commercial department are happy to assist.