Tip About Minimum Credit Card Purchases

[Tigger&Belle]

I don't prefer to put very small purchases on a CC, however, I don't always have the cash on me and I sometimes don't realize it until I am paying. If I see a minimum purchase sign and my purchases are for less than the amount, I still give them my CC, with maybe an explanation that I don't have enough cash. I don't think that I've had anyone turn me down and if they did I would remind them that they are not allowed to do so. Personally I wouldn't take legal action, however if they refuse the purchase I wouldn't be too happy.

 

[bicker]

It is interesting how little lots of customers know about the costs associated with accepting credit cards. To be honest, I had to look it up myself this morning, never really having looked into the specifics before.

The least expensive one I found was a service that charges $0.20 plus 1.29% per transaction (plus $8 per month, plus $216 upfront). Their merchant service probably sucks at that price. Others ranged up to $0.25 per transaction and 2% per transaction, but again these were online services, so probably lack in service compared to more mainstream service providers. Also, as others have mentioned, typing in the card number instead of swiping the card typically doubles the cost to the vendor.

There is also another cost we don't think about -- how long after we've made our purchase the vendor actually gets our money. It isn't immediate, and indeed, there may be a cost associated with reducing that lag time.

 

[DVCLiz]

It is interesting how little lots of customers know about the costs associated with accepting credit cards. To be honest, I had to look it up myself this morning, never really having looked into the specifics before.

The least expensive one I found was a service that charges $0.20 plus 1.29% per transaction (plus $8 per month, plus $216 upfront). Their merchant service probably sucks at that price. Others ranged up to $0.25 per transaction and 2% per transaction, but again these were online services, so probably lack in service compared to more mainstream service providers. Also, as others have mentioned, typing in the card number instead of swiping the card typically doubles the cost to the vendor.

There is also another cost we don't think about -- how long after we've made our purchase the vendor actually gets our money. It isn't immediate, and indeed, there may be a cost associated with reducing that lag time.

Here's the thing, though -as a customer, I don't care. I want to be able to buy what I need from a business, and pay for it with the method of my choice, and I ought to be able to do that. If there are no legal limits to a purchase amount, I want to be able to buy a pack of gum with my Visa if I choose, regardless of the impact to the business. That's my right as a customer. And if a store or business makes it difficult for me to do that, I will take my business somewhere else. But before I do, I will certainly let the store manager know that I'm doing it because of their illegal policies.

I'm not going to be spend any time worrying about a business, sorry to say...

 

[bicker]

Oh yes, no question. It's really just a matter of understanding why businesses do what they do. If you find yourself asking, "Why don't they.... ?" or "Why do they.... ?" all the time, it has got to be frustrating! So given the costs, it does make sense that businesses will try to resist our urge to use plastic for small purchases -- it's just not profitable for them.

Be careful with that "That's my right as a customer" stuff, though. What the credit card companies giveth, they can taketh away. While we can surely always take our business elsewhere if we don't like how a business operates, with something like this I think it more than likely that if it were allowed, the vast majority of businesses in certain sectors (like places that sell chewing gum) would take advantage of the allowance. And remember that markets exist everywhere. The folks we're referring to as "businesses" here are actually the customers in the customer-supplier relationship between vendor and credit card company (with the payment processing service serving as middleman). If one credit card company starts offering better terms than the others, I wouldn't blame the businesses to start providing folks incentive to use that credit card, and I wouldn't be surprised to see that customer reaction push the other credit card companies to start offering better terms to the vendors as well.

 

[Tigger&Belle]

Here's the thing, though -as a customer, I don't care. I want to be able to buy what I need from a business, and pay for it with the method of my choice, and I ought to be able to do that. If there are no legal limits to a purchase amount, I want to be able to buy a pack of gum with my Visa if I choose, regardless of the impact to the business. That's my right as a customer. And if a store or business makes it difficult for me to do that, I will take my business somewhere else. But before I do, I will certainly let the store manager know that I'm doing it because of their illegal policies.

I'm not going to be spend any time worrying about a business, sorry to say...

It's not that I don't care about the business and understand the cost to the business, however it's short sighted for a business to anger the customers. My $5 purchase this time could be a $50 purchase the next time.

 

[Nette]

Ok, so two of my questions were answered. Lower fee for the debit card, and whether there was a transaction fee.

Which leaves one more question... I've heard that when you charge a meal at a restaurant, that if you leave the tip on the same card, the CC fees get deducted from the waiters tip. True? God, I hope not... that's just wrong!

 

[FinallyBoughtDVC]

It's not that I don't care about the business and understand the cost to the business, however it's short sighted for a business to anger the customers. My $5 purchase this time could be a $50 purchase the next time.

And, that's my theory at my business. I have, once in a blue moon, had a customer purchase only a greeting card or other small item for $3.50 plus tax on a credit card. I probably lost money on the transaction when all was said and done, however, my hope is they'll return.

For some small businesses (card shops, convenience stores, etc.) the price point per transaction is probably very low and they can't afford to continually eat the difference in the hopes the consumer will come back and spend more. That is why we're seeing more and more of these types of businesses installing ATM machines in their stores and making the customer pay the ATM fee and pay with cash.

This phenomenon of people using their cards for everything (including $2 and $5 purchases) is relatively recent - and the CC companies have not kept pace. Which is why, I am sure, they are becoming more lenient with businesses who choose to impose a minimum. I will, when I have time this week, check my most recent mailings from my merchant services company. I am almost sure they changed the policy on this.

Of course, the consumer will "vote" with their card - but if there are no more little guys left - there won't be anyplace to vote.

I can tell you this - no business can survive for very long if they are paying these huge CC processing fees on small purchases. The rules are going to change one way or the other, because the CC processing companies are not going to want to lose clients and the small businesses are drowning in fees.

I'm not sure where the consumer will end up in all this, but I do believe that if the consumer continues to want the ease of using their card - they may want to better understand the effect it is having on small business - because a business going under or raising their prices to cover these fees does not help the consumer in the long run.

Sorry this is so long - it's my long, unadulterated, Monday morning ramblings...

 

[bicker]

Which leaves one more question... I've heard that when you charge a meal at a restaurant, that if you leave the tip on the same card, the CC fees get deducted from the waiters tip. True? God, I hope not... that's just wrong!

The restaurant is charged the fee on the entire amount of money you charge, regardless of whether it is for the tip or not. It is up to the restaurant whether or not to pass that cost along to the server. It would be fair to do so, since in the end the restaurant is only getting the tip minus fee from the customer to give to the server.

 

[FinallyBoughtDVC]

Ok, so two of my questions were answered. Lower fee for the debit card, and whether there was a transaction fee.

Which leaves one more question... I've heard that when you charge a meal at a restaurant, that if you leave the tip on the same card, the CC fees get deducted from the waiters tip. True? God, I hope not... that's just wrong!

Some restaurants do and some restaurants don't. Depends on their policy. I think it's perfectly reasonable for a restaurant to expect the person receiving that portion of a charge to cover the fee. I think it's a heck of a lot of paperwork and if I owned a restaurant, I probably wouldn't bother for just that reason (lazy me ) - but, I don't think it's wrong.

 

[va32h]

Here's the thing, though -as a customer, I don't care. I want to be able to buy what I need from a business, and pay for it with the method of my choice, and I ought to be able to do that. If there are no legal limits to a purchase amount, I want to be able to buy a pack of gum with my Visa if I choose, regardless of the impact to the business. That's my right as a customer. And if a store or business makes it difficult for me to do that, I will take my business somewhere else. But before I do, I will certainly let the store manager know that I'm doing it because of their illegal policies.

I'm not going to be spend any time worrying about a business, sorry to say...

Okay Liz, you and usually always agree, so it's going to pain me a little to say this!

This attitude is exactly what runs small businesses out of town and brings in the Walmarts and Best Buys and other ginormous chains that can afford to throw away half the transaction cost on processing fees (and do enough volume to negotiate better processing fees in the first place!)

Of course it isn't the customer's job to worry about the business owner's bottom line. But if people want small businesses to survive, much less thrive, they may have to be willing to forego little conveniences, like using a credit card for a pack of gum. If convenience is the most important thing to the customer, of course that's their prerogative. But I fear only mega-chains will be able to afford to offer all those conveniences. Why does this matter?

Well in my case, it matters because my small business carries better quality, unique items. I will special order any product that my vendors carry, for any customer. I can give personal recommendations on the products I carry, because I know my product line inside and out. I know that I offer products and services that chain stores in my genre do not. I even offer products and services that other, larger, independent stores in my genre do not. I have a loyal customer base that comes back to my site again and again, because they know that if I go out of business, they will miss me.

There are ways for merchants to save. Discover and Amex charge the most for accepting their cards, so just switching to MC and Visa can save (although you run the risk of losing business, but nearly everyone that has one type of card has another). My service charges less for debit card transaction than credit transactions, so I process as a debit card whenever I can. (That's why Visa runs all those ads encouraging you to use your Visa debit card as a credit card!)

The bulk of my business is online though, where I have to take credit cards, and I do take Discover and Amex. However, I use my shipping and handling charges to encourage the customer to make larger purchases. If a customer knows they will pay the same price to ship $5 worth of merchandise or $50, they tend to spend more, to make the shipping cost seem more reasonable.

 

[jenwolgey]

I've been informed of a "policy" like this at a store already. I had no cash on me and it wasn't convenient to go to an ATM and come back. The business owner refused my card, I left the merchandise on the counter (I think it was worth $9 give or take a few cents) and I've never returned to that store. She lost my business permanently that day. Who knows how much I might have spent the next time I patronized her store? In my opinion, if a merchant decides to accept credit cards, they should always accept them, not on a case-by-case basis of how much the customer is spending. If they don't want to pay the fees, then stick to cash transactions, period.

 

[CJMickeyMouse]

This (and the attitudes of the people who want to turn in everyone who does it) is why we don't accept credit cards. The insurance companies tell us what to charge for our merchandise..... and many times the margin is at or barely above what we would lose on a credit card transaction.

Bad business practices on our part????? Well I have heard of that jingle "lose a little on every sale and make it up in volume"..... but somehow I just don't think that would work out........

 

[j's m]

This phenomenon of people using their cards for everything (including $2 and $5 purchases) is relatively recent

This is me, BUT usually only at the supermarket since I do have a 5% rewards card, and my small purchases do add up at the end of the year.

I very rarely shop mom and pop stores, we have too many large chains around, but when I do, I sort of impose my own $ 10 minimum to charge. I rarely carry more than that in cash.

 

[bicker]

This attitude is exactly what runs small businesses out of town and brings in the Walmarts and Best Buys and other ginormous chains that can afford to throw away half the transaction cost on processing fees (and do enough volume to negotiate better processing fees in the first place!)

And better prices, overall, for the same products. You say that as if it is a bad thing. Generally, I find the large chains provide not only better prices and better policies, but better service at the same price.

Small, local businesses are good for coming up with new offerings, and for offering unique items. That is the niche small, local businesses serve well, and should focus on exclusively. I see no reason to support them for doing things that the national chains do better.

So my point is that while I agree wholeheartedly, as I mentioned earlier, that customers should care about the why's and wherefor's of the business' concerns ("know thy enemy" ), but not to support local businesses providing lesser products and services for higher prices.

 

[lulu71]

It's a catch 22 for me because while it is my personal policy to shop at the mom and pops as much as reasonably possible, I am an Amex user for everything. So while I feel good for patronizing the little guy, I feel a little guilty whipping out the Amex to pay because I know the fees are so high.

 

[KariC]

In addition to the tipping questions...the "middle company" between your bank and the credit card processor will automatically reserve an additional 20% (sometimes more) to cover the tip. Your card is run through before you write in the tip, and they want to make sure you can cover the additional amount you write down for a tip. This also can be done by gas stations.

To the PP who mentioned that she wants to buy her pack of gum....I think one thing that we could expect to see, as more consumers do this, is an increase in price of consumer goods at those type of "convenience" stores. They have to make a profit, to to stay in business, in order to provide the goods that you would like them to have.

A personal credit card story....I once charged a meal and tip to my debit card. The meal (forget the tip amount right now) was $8.47. Unfortunately, the card was run for $847, notice the missing decimal point! I noticed and pointed out the issue, and they did a refund, but could NOT recharge my card for the $8.47 (Thankfully my mom could pay for my food). Are you wondering why??? Well, a hold for $847 + 25%(to cover that tip) was put onto my checking account, which put us into negative territory on a Friday afternoon. Credit Card companies can put an immediate hold on your account when your card is swiped, but they do have up to 14 business days to credit your account, either for a return (at a store) or for a situation like I had at a restaurant. Let me tell you, my DH and I learned an awful lot about how processing works that weekend (and we have a merchant account).....especially since it put us in a HUGE bind for week or so. The bank manager did what he could, but a third party had put the hold on the funds....so he was limited.

Remember, credit cards and debit cards are convenience items. And with the way Americans are using them (and I am at fault, too...I never carry cash!), we (as a whole) are not responsible as seen in the HUGE debt load many Americans carry these days. And credit card companies are taking advantage of this. Did you know, some cards will increase your APR to almost 30% (don't know specifics) for one late payment? I think we all (including myself) need to be way more careful with this convenient method of paying.

 

[bicker]

The business owner refused my card, I left the merchandise on the counter (I think it was worth $9 give or take a few cents) and I've never returned to that store. She lost my business permanently that day. Who knows how much I might have spent the next time I patronized her store?

That cuts both ways. You have to figure in how many customers will or won't do that, and figure in how many customers you'll gain from your competitors because, after all, they have the same policy. In the end, it could all just come out in the wash, and the policy therefore still has its intended impact.

In my opinion, if a merchant decides to accept credit cards, they should always accept them, not on a case-by-case basis of how much the customer is spending. If they don't want to pay the fees, then stick to cash transactions, period.

I personally would do exactly as you did, and even if they only took MasterCard and VISA. (I only use Discover.) It's just a matter of what's important to me. However, I don't begrudge the vendor for not accepting my credit card if they choose. It's a give and take. If I get annoyed enough about it, I'll call the credit card company. If the vendor gets annoyed enough about that, they'll put pressure on the credit card company to relax the regulation or just relax the enforcement. And the world goes round and round.

 

[lulu71]

And better prices, overall, for the same products. You say that as if it is a bad thing. Generally, I find the large chains provide not only better prices and better policies, but better service at the same price.

Small, local businesses are good for coming up with new offerings, and for offering unique items. That is the niche small, local businesses serve well, and should focus on exclusively. I see no reason to support them for doing things that the national chains do better.

So my point is that while I agree wholeheartedly, as I mentioned earlier, that customers should care about the why's and wherefor's of the business' concerns ("know thy enemy" ), but not to support local businesses providing lesser products and services for higher prices.

I completely diasagree about the better service. Small, local businesses, IMO, run circles around the chains in the service department. Your minimum wage college kid is just not going to have as much of a stake in the business, and the lack of effort shows. Va32h is a perfect example. You are just not going to find that much effort at Walmart.

When I hear that people I know don't even check out the little guys for some items, it just strikes a nerve with me. I guess it's one of my personal pet peeves.

 

[bicker]

I doubt that Va32h would charge the same prices as Wal-Mart either. When comparing apples to apples, i.e., a local store to a national chain, when both are charging the same price, I note no significant difference in service. That's because the national chain benefits from economies of scale. So perhaps you'll need to compare Va32h to JC Penney or Macy's to get to the same price-point, and generally the service from those places is excellent.

The best comparison for me is hardware stores. Folks make such a big deal about "saving the local hardware stores". We have two, in the area, and as small as they are, I can find things a lot easier in the Lowe's than I can in either of the local hardware stores. And the folks -- uh -- folk (there never seems to be more than one clerk in either store) in the store aren't any more helpful than the nice folks at Lowe's.

 

[iloveboardwalk]

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

Are they a franchising business?