Tip About Minimum Credit Card Purchases

[DisInsider]

Have you ever been to a small business that won't let you use a credit card unless you are spending a specific amount? Sometimes they have a sign posted that says "Minimum $10 purchase to use credit card". Now you know what I'm talking about, huh.

I recently found out that it is against credit card company policy for businesses to require a minimum purchase in order for a consumer to use their card. The only reason some merchants require this is because the credit card companies get a small percentage of the amount that is charged. In many case it's about 3%. That amount varies by company, with American Express charging merchants the most, which explains why many businesses still don't accept AMEX.

If you use a "rewards" or a "miles" card. Or if you use one that has no annual fee, guess who pays that fee? The business owner. One of those cards gets a higher fee than a card that doesn't have all of those features.

But in any case, if you ever encounter a minimum purchase requirement, you can tell the merchant that you know it is against credit card company policy to require a minimum purchase. You can also complain to the credit card company and they will give the merchant a warning. If the merchant doesn't stop violating the policy, they can lose their ability to accept credit cards and be blacklisted by all of the credit card companies.

Just some interesting information that I thought I'd share.

 

[iloveboardwalk]

First, where did you hear this?

Second, it's usually only small businesses that use this practice. In my opinion, they wouldn't do it just because...they must do it because the smaller purchases make using the CC servive cost prohibitive. Since it's not really a big deal, I don't think it's worth reporting them because they're a small business and it just seems kind of petty to hurt a small business person trying to get by just so you can buy a pack of gum with your visa. If you don't like the policy, shop elsewhere...why would you want them "blacklisted?"

 

[Mysteria]

Have you ever been to a small business that won't let you use a credit card unless you are spending a specific amount? Sometimes they have a sign posted that says "Minimum $10 purchase to use credit card". Now you know what I'm talking about, huh.

I recently found out that it is against credit card company policy for businesses to require a minimum purchase in order for a consumer to use their card. The only reason some merchants require this is because the credit card companies get a small percentage of the amount that is charged. In many case it's about 3%. That amount varies by company, with American Express charging merchants the most, which explains why many businesses still don't accept AMEX.

If you use a "rewards" or a "miles" card. Or if you use one that has no annual fee, guess who pays that fee? The business owner. One of those cards gets a higher fee than a card that doesn't have all of those features.

But in any case, if you ever encounter a minimum purchase requirement, you can tell the merchant that you know it is against credit card company policy to require a minimum purchase. You can also complain to the credit card company and they will give the merchant a warning. If the merchant doesn't stop violating the policy, they can lose their ability to accept credit cards and be blacklisted by all of the credit card companies.

Just some interesting information that I thought I'd share.

Thank you for this info. Funny you should mention it tonight. Dh and I were just discussing this earlier. I have come across a few places that do this. Is it just a policy, is it a law, bylaw, federal, state? If they charge you extra to purchase something under the limit is it illegal or just unethical that they charge you extra to put it on credit?

Myst

 

[iloveboardwalk]

Thank you for this info. Funny you should mention it tonight. Dh and I were just discussing this earlier. I have come across a few places that do this. Is it just a policy, is it a law, bylaw, federal, state? If they charge you extra to purchase something under the limit is it illegal or just unethical that they charge you extra to put it on credit?

Myst

Perhaps it neither, perhaps it's the business owner trying to stay in business. What $10 item is SOO urgent that you HAVE to purchase it RIGHT then with a credit card? Why is it SO important to "enforce" this policy on a private business?

 

[spazzyjazzy]

It's not worth it to me to go through all that just because they wouldn't let me charge something for less than 10 dollars. I would just get the cash for it. No big deal. I wouldn't want to hurt the small business in any kind of way.

 

[bicker]

I do believe that it is indeed not permitted to require a minimum purchase. I also believe that it is not worth the time and effort involved in pursuing action against a small business that has a minimum purchase requirement. Lots of work; practically no reward.

 

[Mysteria]

Thank you for this info. Funny you should mention it tonight. Dh and I were just discussing this earlier. I have come across a few places that do this. Is it just a policy, is it a law, bylaw, federal, state? If they charge you extra to purchase something under the limit is it illegal or just unethical that they charge you extra to put it on credit?

Myst

Perhaps it neither, perhaps it's the business owner trying to stay in business. What $10 item is SOO urgent that you HAVE to purchase it RIGHT then with a credit card? Why is it SO important to "enforce" this policy on a private business?

What the heck?! That is a pretty strong response to a pretty simple and just inquistive question. I will leave it at that before I get points for going off on your way over the top behind. Take a chill pill and go to bed. Oh and I think you are a little wound up so Whatever is bothering you please get help.

 

[bicker]

Is it just a policy, is it a law, bylaw, federal, state?

It is just a policy, but I believe all four of the big credit card companies (MasterCard, VISA, Discover, and American Express) all have the policy.

 

[DisInsider]

I was informed of this policy when I recently purchased a small business and was setting up my credit card processing system. My merchant services company representitive informed me of this policy. To the best of my knowledge it is not illegal, but it is considered unethical and a violation of credit card company policy. I have not checked my merchant services agreement to see if it is in there or not.

As the owner of a small business and a consumer, I understand that a great deal of people these days simply don't carry cash. They prefer to use their debit or charge cards when shopping. If my customer wants to use a credit card to pay for a $3 cappuccino, who am I to tell them they have to spend more money to use that card? I would rather pay the 3 cents to the credit card company than risk losing that customer forever.

I have seen those signs, and have even been asked for cash when my perchase was not a specific amount. This was before I knew about this policy. I'm not saying I would turn someone in, but I would never shop a business that had this requirement.

As for charging a fee for a customer to use their card, I would not do that either. My only exception is if they were paying by credit card over the phone. This is only because if I have to manually enter a person's credit card information, the credit card company charges me double the normal rate. Unfortunately, in this situation, the [extra] amount for the manual entry would have to be paid by the customer.

The bottom line here is that the credit card companies are out to make all the money they can. And they have many ways of getting this money. It was quite an education for me when I learned all of this. We live in a time where consumers expect convenience. Having the ability to pay with plastic is one of the biggest conveniences around. Not accepting credit cards, while still an option, is not a good business practice.

 

[iloveboardwalk]

Thank you for this info. Funny you should mention it tonight. Dh and I were just discussing this earlier. I have come across a few places that do this. Is it just a policy, is it a law, bylaw, federal, state? If they charge you extra to purchase something under the limit is it illegal or just unethical that they charge you extra to put it on credit?

Myst




What the heck?! That is a pretty strong response to a pretty simple and just inquistive question. I will leave it at that before I get points for going off on your way over the top behind. Take a chill pill and go to bed. Oh and I think you are a little wound up so Whatever is bothering you please get help.

Thank you for the advice. I meant the general "you" not you specifically, unless you actually do intend on reporting the business.

 

[Mysteria]

I was informed of this policy when I recently purchased a small business and was setting up my credit card processing system. My merchant services company representitive informed me of this policy. To the best of my knowledge it is not illegal, but it is considered unethical and a violation of credit card company policy. I have not checked my merchant services agreement to see if it is in there or not.

As the owner of a small business and a consumer, I understand that a great deal of people these days simply don't carry cash. They prefer to use their debit or charge cards when shopping. If my customer wants to use a credit card to pay for a $3 cappuccino, who am I to tell them they have to spend more money to use that card? I would rather pay the 3 cents to the credit card company than risk losing that customer forever.

I have seen those signs, and have even been asked for cash when my perchase was not a specific amount. This was before I knew about this policy. I'm not saying I would turn someone in, but I would never shop a business that had this requirement.

As for charging a fee for a customer to use their card, I would not do that either. My only exception is if they were paying by credit card over the phone. This is only because if I have to manually enter a person's credit card information, the credit card company charges me double the normal rate. Unfortunately, in this situation, the [extra] amount for the manual entry would have to be paid by the customer.

The bottom line here is that the credit card companies are out to make all the money they can. And they have many ways of getting this money. It was quite an education for me when I learned all of this. We live in a time where consumers expect convenience. Having the ability to pay with plastic is one of the biggest conveniences around. Not accepting credit cards, while still an option, is not a good business practice.

Thank you for the clarification in a mature, clear, concise and business person perspective.

Myst

 

[iloveboardwalk]

As the owner of a small business and a consumer, I understand that a great deal of people these days simply don't carry cash. They prefer to use their debit or charge cards when shopping. If my customer wants to use a credit card to pay for a $3 cappuccino, who am I to tell them they have to spend more money to use that card? I would rather pay the 3 cents to the credit card company than risk losing that customer forever.

Prefer is the operative word here, I think.

Who are you? The business owner. 3 cents for every person who refuses to carry cash for a cup of coffee can sure add up.

Not accepting credit cards, while still an option, is not a good business practice.

Maybe, maybe not, I think each business owner should decide that for themselves. I don't think reporting them is a wise use of time, personally.

On the other hand, here I am arguing about it on a message board at 11:30 at night, so who am I to tell anyone what a wise use of time is?

 

[Mysteria]

Perhaps it neither, perhaps it's the business owner trying to stay in business. What $10 item is SOO urgent that you HAVE to purchase it RIGHT then with a credit card? Why is it SO important to "enforce" this policy on a private business?

Thank you for the advice. I meant the general "you" not you specifically, unless you actually do intend on reporting the business.

There are no words. Nice try at a recovery though.

Myst

 

[iloveboardwalk]

There are no words. Nice try at a recovery though.

Myst

Maybe you should take your own advice and "let it go"

 

[Acklander]

As for charging a fee for a customer to use their card, I would not do that either. My only exception is if they were paying by credit card over the phone. This is only because if I have to manually enter a person's credit card information, the credit card company charges me double the normal rate. Unfortunately, in this situation, the [extra] amount for the manual entry would have to be paid by the customer.

I'm surprised they didn't mention it to you that it's against policy to charge extra for using a credit card as well.

 

[Obi-Wan Pinobi]

Huh, it's not just small Mom and Pop businesses that put the minimum on charges. Dollar Tree, which is a pretty sizable chain of dollar stores, requires a $7 minimum purchase for credit cards

 

[powellrj]

the gas station I like to use gives a cash discount. I guess thats a nice way of saying we charge you more to use your credit card, without going against the policy.

the music store where DS takes guitar lessons also has a minimum purchase for credit cards, but I understand because they are a small business and I have seen people come in and try to charge $1 worth of picks on a credit card.

 

[kaw1218]

I'm surprised they didn't mention it to you that it's against policy to charge extra for using a credit card as well.

BUT,they are allowed to offer a CASH discount. They find ways around it.

 

[bicker]

Yes, the cash discount is allowed. The issue is being upfront about the price. They cannot advertise $X and then force credit card customers to pay $X+$Y. However, they can advertise $X and then allow cash customers to pay $X-$Z.

 

[FinallyBoughtDVC]

Credit Card transactions cost a lot more than 3 cents...love to know what merchant services company you're using!!!

I use Chase Merchant Services for my small business and each swipe of a card costs me approximately 30 cents before we even take off the discount rate off the total of the transaction (there's a transaction fee every time the call is made to authorization - we're also charged a discount rate on the sales tax - guess who makes that up when it's time to pay sales tax). If my gross profit on an item is approximately 40% (not net) and the item costs you $2.00, you've immediately lowered my gross profit to less than $.50 by using your credit card. Figure in all the other expenses that come off the gross profit, heat, lights, salaries, rent, etc. it really wouldn't be worth it. Debit card transactions cost a merchant less, but still have a fee of approximatly 30 cents. And, yes, the merchant is charged an additional surcharge (on top of a transaction fee and discount rate) when someone uses certain types of reward and signature cards.

I don't hold my customers to a minimum because most purchases are over $10, however I am pretty sure the credit card processing companies (some of them anyway) have loosened up on this restriction. I remember receiving a mailing from Chases recently (like in the last 6 months) that stated that it was reasonable for a merchant to post a minimum. I'll have to go look for it, as I wasn't really paying attention because it didn't really apply to me.

The fees being charged to merchants to cover the banks' credit card expenses are beginning to reach the breaking point for businesses and will end up being passed on to the consumer. Someone has to pay for all these perks we all get on our cards - and that someone is all of us.

Honestly, I am surprised that someone would find going after small businesses who have this policy to be a cause worth fighting for. Sheesh...