A lot ofbusiness won't accept credit card purchases under $10 now. Can they do that?

Question

I saw a report on the news that said credit card companies do not like that when merchants do that. They said to call their customer service line and inform them of which businesses are doing that.

Answer 1

Of course they don't, but it isn't illegal.  Many businesses are actually charging the fees to process credit card transactions on to the consumer (ie-Taco bell in Las Vegas/Henderson charges $1 per transaction).  it isn't nice, and it prevents me from doing business with these places, but it is legal.

Answer 2

Legally,

They cannot impose a minimum amount for using your card. But they can charge a non-variable surcharge such as 50 cents, not 2%.

Answer 3

Having owned a convince store for years I know that most of these answers are correct, but it goes further than that.

For example,- You purchase a item for $6.99.  that item probably cost the store about $4.90 or so. Out of the $2,09 profit the store must pay the overhead which amounts to - rent or bank payments, electric, heat, taxes and help wages.

Credit card companies charge a percent as stated by others before. say it is 2% (american express is the worst and the main reason most wont accept it any more). But the 2% isn't the end of it. That is just the start. the % is .14 cents. then there is an access fee of 5 cents, a look up fee of 6 cents, a coverage fee of 5 cents, and a billing fee of $10.00 for the month.

Don't sound like much but times that by a hundred customers a month. Seemes to me the credit card customers would want the store to to take the card so they can rake you across the coals for 23% intrest. What a scam, AND it's legal.

Answer 4

Technically no, they can't require a minimum. Their merchant agreement with VISA/MC/Discover/Amex will require them to accept all amounts without charging the customers extra or enforcing a minimum. They do not get to pick and choose which transactions they will accept. They either accept credit cards or they don't.

However, many small businesses do require a minimum amount in violation of these rules and count on the customers not raising a fuss over it. Why do they do this? VISA charges a percentage of each transaction as a fee but there is also a minimum charge per transaction. I don't know the exact numbers but it's something like a quarter or fifty cents minimum processing fee. On sales smaller than $3 or $5, the store is probably paying more to VISA in processing fees than they are making in profit on the sale. Large grocery stores can absorb these costs, small businesses can't.

You can raise a fuss and try to make them process the transaction but I seriously doubt complaining to VISA will cause them to lose their merchant agreement. Or you can realize that they are just trying to make their business profitable. I never carry cash on me so I've run into this many times. If you are polite and reasonable and explain that you just don't have cash but you HAVE to have the $1.29 soda put on your card or you will walk out the door and go to their closest competitor, they may just take care of you in the name of customer service.

It's not a question of legality since this type of thing is not really governed by federal, state, or local laws. It's a question of contract breach between the merchant and VISA

Answer 5

Businesses get charged fees when people use credit instead of cash. I don't see why they can't make you have a minimum purchase to use credit. They have to get their fees somewhere.

Answer 6

I've heard that businesses sign a contract that states they cannot deny a credit purchase.  I know a lot will anyway.  Then reason is that it costs them money to process a credit transaction and for a $10 transaction, it eats up all the profit.

Answer 7

Yes, the reason is because it costs the business a certain fee every time you use your card as credit.  The credit card companies then get that fee.  If the charge is small it is not worth it for small businesses.

This is why credit card companies offer rewards points, because it encourage people to use their credit cards and they not only make money of you but also from the business you charged it at.

Answer 8

They do it because it cost them more in fees than your $10 purchase. They don't care if they loose a cash customer and they don't care what the credit card company's have to say. They have a legal right not to accept a credit card for small purchases.

Answer 9

It use to be very common that no one would take a credit card for less than $10 -- some were even higher.  I am surprised at the number of places that now accept credit cards, like fast food restaurants.

The merchant is charged fees by the credit card company.  For smaller purchase, those fees eat up any profit.  If the business isn't going to make a profit on your purchase, you don't qualify as a "good customer".

Answer 10

No store has to accept credit cards.  Most small store prefer cash over credit cards.  One reason is that credit card companies charge 1-3% per transaction.  For a small transaction, small stores don't want the hassle.