Your friend's claim does have some merit. In China, there was a policy that required establishments to accept cash as a form of payment. However, even before the cashless society trend became prominent in China, businesses found a way to circumvent this policy. Instead of directly stating that they don't accept Chinese Yuan (CNY) as payment, they would argue that they cannot validate the authenticity of the cash bill being presented, which in turn prevents them from accepting it.


PS: Good luck even spending 航空钞 (Cosmos Ceremonial Notes) in China, heard many non-major bank branches will not even accept it due to not having the "necessary equipment to validate"