Legal tender is a medium of
payment recognized by a legal system to be valid for meeting a financial obligation. Paper
currency and
coins are common forms of legal tender in many countries. Legal tender is variously defined in different
jurisdictions. Formally, it is anything which when offered in payment extinguishes the debt. Thus, personal
cheques,
credit cards,
debit cards, and similar non-cash methods of payment are not usually legal tender. The law does not relieve the debt obligation until payment is tendered.
Coins and
banknotes are usually defined as legal tender. Some jurisdictions may forbid or restrict payment made other than by legal tender. For example, such a law might outlaw the use of foreign coins and bank notes or require a
license to perform
financial transactions in a foreign currency.