Not all payment methods have the same status in Portugal. Despite the strong adoption of digital solutions, there is one rule that continues to prevail: physical money maintains a central role and, in most cases, cannot be refused by merchants.
The distinction may surprise those who are used to paying by card or cell phone, but it arises directly from the legislation in force. While some means are optional, others have legal recognition that generally requires their acceptance.
According to , which cites the Bank of Portugal, only euro notes and coins are legal tender in the country. This means that they are, by definition, a valid means of payment, without prejudice to the limits and exceptions provided by law.
Physical money has special status
In essence, the principle is simple. Cash should be accepted in most transactions as long as there is no legal restriction or valid reason for refusal involved. The law considers that paying with notes or coins may be equivalent to the fulfillment of a financial obligation.
Banco de Portugal explains that the creditor has, as a rule, the duty to accept this type of payment and cannot refuse it without valid justification. This rule results from the European framework associated with the euro and its status as legal tender.
Still, there are exceptions. A store may refuse cash when there is a good faith reason. A common example is the disproportion between the purchase price and the bill presented, such as trying to pay a very small amount with a large bill. It is also possible to avoid paying in cash if there is an agreement between the customer and merchant to use another means.
There are limits to paying in cash
There are also limits defined in Portuguese legislation. Law No. 92/2017, which added article 63-E to the General Tax Law, prohibits cash payments in transactions of any nature involving amounts equal to or greater than 3,000 euros, or the equivalent in foreign currency.
When the payment is made by individuals not resident in Portugal and who do not act as entrepreneurs or traders, the limit increases to 10 thousand euros.
IRC taxpayers, as well as IRS taxpayers who have or must have organized accounting, must make payments on invoices or equivalent documents with a value equal to or greater than 1,000 euros through a means that allows the recipient to be identified, such as bank transfer, certified check or direct debit.
The law also prohibits the payment of taxes in cash when the amount exceeds 500 euros.
Furthermore, a trader is not required to accept more than 50 currencies in a single trade. According to the Bank of Portugal, this limitation does not apply to the State, through the Treasury banks, the Bank of Portugal and credit institutions.
Cards depend on merchant choice
If the rule is stronger in the case of physical money, the same is no longer the case with bank cards. The law does not oblige store owners to provide this type of payment.
In practice, each establishment decides whether or not to accept cards and, if they do, they can choose the brands and types they offer, such as debit, credit or prepaid cards. This decision generally takes into account the costs associated with fees charged for electronic transactions.
However, there are rules to be followed when the merchant chooses to accept cards. According to Banco de Portugal, you must inform customers, clearly and visibly, about which cards and payment brands you accept at points of sale.
Furthermore, you cannot limit, as a rule, the acceptance of cards of the same type and brand. For example, if you accept debit cards from a certain brand, you must accept payments with all debit cards from that brand, regardless of the institution that issued the card.
This freedom explains why there continue to be stores that refuse electronic payments or that impose specific conditions within the permitted limits. Despite this, the trend in using digital media has followed consumer habits.
Refusing money can have consequences
A lesser-known aspect has to do with the absence of direct sanctions for those who refuse cash. Banco de Portugal clarifies that no specific sanctions are foreseen regarding the refusal of payments in euro notes and coins.
Still, this refusal may have consequences for the relationship between the parties. According to the Bank of Portugal, in light of the Civil Code, the debtor fulfills the obligation when he performs the performance to which he is bound, and the creditor may be in default if, without justified reason, he does not accept the service offered to him.
In practice, this reinforces the position of physical money as a means of payment with its own legal status, even in a context in which technology has been transforming the way Portuguese people pay on a daily basis.
The rule of thumb is this: card, MB Way and other digital media may be convenient, but they depend on merchant acceptance. Banknotes and coins in reais are legal tender and, unless legal limits, agreement between the parties or valid reason, must be accepted as a means of payment.
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