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Do banks and stores have to accept British coinage?

Are British banks and shops required to accept coins issued by the Royal Mint? This might sound like an absurd question but there is a basis for asking it. The Royal Mint has announced that it will issue a silver coin with a face value of 20 Great Britain pounds (GBP). This coin will have the famous Saint George and the Dragon art that appears on the gold Sovereign coin; this is why I am buying a small number of these coins. The cost of the coin will be 20 GBPs, and shipping will be free to buyers in the UK. Those of us who live overseas must pay 12.5 GBPs for shipping for each order of up to three coins. Each coin contains slightly more than a half ounce of silver (worth maybe $15 USD), and only 250,000 coins will be minted. If I have these coins and get tired of them it seems that the worst case for recovering what I paid is to use them to purchase goods and services while I am London next year. However, there is an article in a coin collectors newspaper that says that these coins will in price to about 10 GBPs once they are distributed to the public in late October. The article says the coins will be only worth their silver value. It says that banks and shops will refuse to accept the 20 GBP coin. How can this be? Since it is official coinage issued by the Royal Mint how can any establishment reject these coins as payment? I am sure that the 1 GBP coin has a precious metal value of only a few pence but everyone accepts it at its face value so why not the 20 GBP coin? In the USA our currency says "This note is legal tender for all debts public and private" and this applies to all of our coins. Is this not the rule in the UK? Thanks for your insight on this matter. I might have to cancel my coin order based on the responses.

Posted by
4536 posts

The Royal Mint itself says:
"Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender. It does not mean that any ordinary transaction has to take place in legal tender or only within the amount denominated by the legislation. Both parties are free to agree to accept any form of payment whether legal tender or otherwise according to their wishes. In order to comply with the very strict rules governing an actual legal tender it is necessary, for example, actually to offer the exact amount due because no change can be demanded." They have indicated they will accept the coin back for 6 months after purchase. The intrinsic value of the silver is £8 or thereabouts. Banks have declined to deal in these coins.

Posted by
26049 posts

George, Those coins, and similar ones, are collector items not in general circulation. They won't be accepted by shops or banks - most members of staff won't even recognize them. Sorry.

Posted by
448 posts

Hi Marco and Nigel: Thanks for your responses. I will probably maintain, rather than cancel, my two orders of three coins per order. The plan now is to give some of them to my Anglophile friends who will probably never even consider bringing them to the UK to engage in commerce with them only to find out that they are pariah coins. Geor(ge)

Posted by
389 posts

Interesting situation, I don't recall another case of a commemorative coin with a face value greatly exceeding its intrinsic value or likely collector value. The Royal Mint's marketing suggests it will always be worth 20 pounds, but it seems this is a case where "legal tender" breaks down in a practical sense. Best to think of it as like buying a commemorative plate I guess.

Posted by
9110 posts

Buy the junk the Franlin Mint et al advertise on late night Tv and see if you can spend it. But wait, buy now and you get twice the amount - - just pay separate postage and handling.

Posted by
448 posts

As Will says this is an interesting situation. Keep in mind that these coins are official coins issued by the Royal Mint just like our pennies, nickels, dimes....are issued by the United States Mint. On the one hand we have a coin that has a silver value of about 8 GBPs, a face value of 20 GBPs, and which is sold public for 20 GBPs. This is treated as a pariah coin which will drop in value as soon as it is distributed at the of October. Banks, stores, and other places of commerce will refuse this coin. On the other hand just a few days after the birth of Prince George of Cambridge the Royal Mint issued a silver coin that is 40mm in diameter (versus the 27mm of this coin), contains one troy ounce of silver worth about 15 GBPs (about $25), has a face value of 5 GBPs, and is sold for 80 GBPs. It has the same St George and the Dragon artwork on one side and a portrait of Queen Elizabeth II on the other. This coin has a total mintage of about 10,000 and these were sold out within four days of release. Furthermore, they are now being sold on the secondary market for several times the original price of 80 GBPs. Doesn't make sense to me. I don't see why a bank cannot accept the 20 GBP coin at face value and then turn it over to the Royal Mint for a credit of 20 GBPs. Will the Royal Mint be refusing to accept these coins down the road? As I said earlier these will probably be excellent gifts to unsuspecting Anglophiles in the USA who will never attempt to use them for commerce in the UK only to find out that they are worth less than 50% of face value and might be rejected in many places of commerce.

Posted by
26049 posts

They are collector items that happen to be in the shape of a coin, made by the folk who make coins for many countries. Treat them like a plate or trophy with some precious metal in them unrelated to their price.

Posted by
970 posts

Official mints in the U.S. have been known to issue and sell commemorative coins, too. Coins made by an official mint and "legal tender" coins aren't necessarily synonymous.