Credit Cards and Minimum Charges

[LinktheDeme]

Friend and I got in a debate regarding credit card companies and establishments that require a minimum charge. Basically so its not a tldr we were wondering how contracts are set up with establishments. Is it illegal for an establishment to require a minimum balance so they are not losing money on the transaction rather than making a profit? (Not referring to less of a profit referring to like the company being charged $2.00 from visa to use credit card and the gross profit from the transaction being $1.00 so the small business is essentially $1.00 below)

I've read a few places that said any minimum charge for a credit card is essentially against the contract (sources were a few years old), but I've seen too many establishments have publicly posted signs that say we require a minimum of x amount to close out a tab at a bar or x amount to charge a minimum to a credit card.

[SamanosukeShiva]

I dont think it's illegal, but most place (usually restaurant) just bite the bullet and hope that the customer will be a regular and come back with a larger purchase. That being said, AMEX charges is so fucking high and that probably is a contributing factor why some place do a minimum order or just dont accept amex altogether

[LinktheDeme]

This was my point of reference http://consumerist.com/2006/04/mega-...violation.html

"Minimum Purchase
Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. They also are not permitted to charge you a fee when you want to use your Visa card."

I'm a bit skeptical to believe this though based on how old this article is though. Also I'm not sure if merchants can negotiate out something when there designing the contract and such.

[AoE]

A lot of small business restaurants that I know just plain don't take credit cards at all (which is annoying for me because I hate carrying cash) so I personally think there's probably a reason for it.

[Pharaun]

It is against VISA regulations to set a minimum purchase amount, and any merchant that is found in violation is subject to fines and or termination of their VISA contract. For the stores that do have a minimum purchase amount, they are banking on the fact that the vast majority of people won't know that it's against the regulations, and/or just won't bother to report them. These regulations are not subject to negotiation and as far as I know there are no businesses that are exempt. I know this because I'm a VISA specialist for a mid-sized Credit Union and have to be familiar with the regulations as a part of my job.

[LinktheDeme]

Would it also be paired with the fact that issuing a sanction might not be cost effective for VISA to even do so?

edit: A good example of what I can think of is

Visa gets just as much business from people buying more to meet the minimum as people paying less in cash so they don't care as much to waste resources and lose even more money by trying to remedy the situation.

[izembo]

Pharaun is correct, they're violating their contract if they put a minimum purchase amount, so just be a dick and report them

[Headspace]

New financial bill passed in like late august allowed places to set a minimum charge of $10 if they wanted to.


http://consumerist.com/2010/09/amex-...-minimums.html

[Boyiee]

Most pizza places and chinese places require 10$ minimum charge.

[izembo]

thats a delivery minimum most times

[Boyiee]

No

edit: small pizza places and chinese places, which the tri state area is riddled with, don't want you using a credit card for just a single slice of pizza or something small. Family owned convenience stores are the same way. Buying bazooka joe gum with a credit card? Just one candy bar? A banana or hard roll for breakfast? You are looking at sub 2$ purchases. It's pretty much a loss for them. Hence the 10$ minimum, which has been in place in the area by people for years.

[izembo]

ive never had or even seen a single pizza/chinese restaurant that wouldnt take a card under $10, they only had minimum $10 for delivery, and even then a lot of them its $8 for delivery

[Maaglin]

Buy something worth buying or carry some cash around.

[Bluefrostie]

I've always wanted to ask them to give me the difference in cash.

[Miragemaiden]

Is it really? I figured a min charge would be fine as the store does have the right to refuse service, so technically they're refusing service unless you spend a certain amount?

I have heard awhile ago that they aren't supposed to be passing the credit card fee onto the customer, however. Whether that's still true to date is beyond me. Also heard they could get fined for passing out receipts that print your card number on it. http://www.rx8club.com/images/smilies/dunno.gif

[Metah]

Buying bazooka joe gum with a credit card? Just one candy bar? A banana or hard roll for breakfast? You are looking at sub 2$ purchases. It's pretty much a loss for them.

I've been working at a 7-Eleven for a few years now. You would not believe how much this happens, and how little I care about whether or not the store makes a profit

[Ksandra]

Every nail shop I've ever been to requires a minimum lol

[alexisamonster]

I work at best buy and our manager's were trying to talk about saving best buy money. They told us every time someone uses a visa card best buy has to pay something like 12-16$ in charges, this includes when employees buy a drink, which i do pretty much every day i work, and so does everyone else.

Our managers also told us that best buy payed something around 12mil in credit card charges on employee drink purchases alone, company wide. which, if true, is pretty awesome imo.

[Kaisha]

Could vary base on location perhaps. In Ontario I've been hit with a lot of $5-minimum, which usually ends up with me grabbing a drink or something. Hasn't really been a problem for me honestly. My credit card is just a fallback for when my debit card is low, so it rarely gets used outside of online purchases.

[EDIT] Now that I think about it, I've been hit with a minimum-transaction needed for debit also at one point, I forget the amount though, was probably $5 also.

[Boyiee]

I've been working at a 7-Eleven for a few years now. You would not believe how much this happens, and how little I care about whether or not the store makes a profit

Yeah now think about the convenience stores that are privately and/or family run, especially by foreigners. Same with pizza places. Papa johns will be fine but not the guy who's got a few mexicans in the back and his entire family running his counter.