A legal tender is an official form of payment that can be accepted for a public or private debt or to meet financial obligations according to the area's laws. Generally, the term refers to the national currency, such as bills and coins, instead of credit lines, checks, or cards. A creditor is obligated to accept legal tender for repayment of a debt. Legal tender can only be issued by the national body that is authorized to do so, such as the U.S. Treasury in the United States and the Royal Canadian Mint in Canada. The laws surrounding legal tender have proved vital in forming the fiscal policy of many countries.
Coins and banknotes may cease to be legal tender if new notes of the same currency replace them or if a new currency is introduced, replacing the former one. In the case of the Euro, coins, and banknotes of former national currencies were considered legal tender in some cases from 1 January 1999 until 28 February 2002. Legally, those coins and banknotes were considered non-decimal subdivisions of the Euro. Legally, those coins and banknotes were considered non-decimal sub-divisions of the Euro.
Countries with extensive business and cultural ties may also accept each other's currencies as legal tender in limited amounts. For example, some U.S. and Canadian merchants close to the U.S.-Canada border accept Canadian and U.S. dollars as payment for goods and services.
A cashless society describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or coins but rather through the transfer of digital information (usually an electronic representation of money) between the transacting parties. Cashless transactions have also become possible using digital currencies. Bitcoin is another popular payment alternative, as it is a virtual online currency that can be used for a growing number of transactions but is not considered legal tender.