# Credit card minimums.

I just heard someone on the tube gushing about a customer’s right to use a card, debit or credit, for any purchase, no matter how small. True, there is a rule made by the financial corporations against minimums, but it isn’t a law.
But, don’t people think about the cost of accepting a eighty-five cent credit card charge to the merchant? Why else would a store owner turn down a sale?
Presenting a card for a candy bar sale when the merchant has a sign stating a \$2 minimum is just plain rude. Reporting that merchant to the CC company is childish.
Peace,
mangeorge

I have to disagree, I have worked for years in accounting and the fact is simple, it doesn’t take anymore time and effort to process a charge for \$1.00 than it does for \$150.00.

Also business set up their prices to include costs, or they should. Everytime I see a business with a minumum I can tell you for sure, they don’t know what they are doing.

For example, when you sell a widget you figure the cost.

1. Cost to me
3. Taxes
4. Labor
5. Misc charges
So widget costs me \$5.00, my expenses (electricity, rent etc etc) and I figure that out to be 5¢ per widget. Taxes are let’s say 10¢ per widget, labour is \$1.30 and misc (such as shipping) is \$2.00.

So each widget costs me 8.45. Now if I sell it for less I’m losing money. Correcly a business should figure in the cost of credit card processing and retail business all do this. So let’s say it’s 3% of the widget sold or 25¢. All business also expect a certain amount of shrinkage (theft). So they also factor this in, yes people who pay are paying the cost of those who steal. For my example I’ll just say it’s 30¢ per widget

So my final cost is \$9.00

Then I calculate how much profit I want to make and price it against my competition and decide on a final price.

Suppose you say \$10.00 minimum credit card orders.

Is that fair? No not at all. Why, because the business have already calculated the cost of credit card fees in the cost. So, if I pay cash, in my example, I’m being charged 25¢ MORE for something I didn’t use.

In today’s electronic age it takes no more effort to submit a charge for \$2.01 than for \$1.99

Basically these businesses are taxing on fees they don’t need to be. When I was an overnight auditor in a hotel in the early 80s it was all done manually.

I can tell you, in terms of time, including looking up credit card numbers in a book (to get authorization,), sorting them, putting the charges together, mailing them off for payment, getting payment, and recording the accounting entry, took no more than 15 minutes on a day with a full house (Hotel had 350 rooms)

So I made say \$5.00/hour. That means at most it cost the hotel 1.25 plus a stamp to process the day’s charges.

In fact some places do have local laws about charging.

All merchant agreements have rules about no minimums.

The fact is businesses are building all cost in the price of an item. If you set minimums your charging me for an associate cost I didn’t use. Now I guess you could say “But you’re building in the cost of shrinkage in each widget, and most people don’t steal.”

The fact why busiiness grouse so much is the cost is OBVIOUS to them. Shrinkage is not that obvious on a day to day basis.

I simply don’t get why businesses do this. The cost IS built in, so you’re not losing anything. Secondly, what kind of business says “We don’t want you”? The whole point of running a business is to put money into your pocket, it’s not so you can have an easy time of it.

As for the OP example, the bottom line is your merchant agreement says “Don’t do that.” So if you do set minimums, you’re violating your agreement. If a business wants to violate what the signed up to do, so bet it. But if you knowingly violate something don’t cry when you get caught.

If only it were this simple. Often times credit card processing fees are a flat amount + a percentage of the sale. On a small enough transaction that flat fee will turn you 3% into a much larger percentage and can easily entirely wipe out the expected profit.

Merchants may agree with the banks not to set minimums; but I find it hard to blame them for refusing transactions that will lose them money.

I’m not sure “agree” is the correct term. Pretty much what the bank is saying is "
accept our cards, and on our terms, pay us, or close down."
They also prohibit discounts for cash.
I know one thing, if I stop using my debit card my credit union notices.

Part of the agreement they make when accepting the cards is that there is no minimum purchase.

If they don’t feel they can follow the agreement and still make a profit, they should never have made it in the first place. If they can’t make a profit and can’t survive without accepting cards, then they need to raise prices or accept a loss on those items as a cost of doing business.

I don’t normally use my card for small purchases but I don’t look down on people who do - and I don’t think it’s childish to report companies who are breaking the merchant agreement. Rather the opposite, it’s the merchant who is being childish - adults follow the rules they agree to.

As for a cash-only movement, why would I ever do that? Cards are convenient, quick, less vulnerable to theft and don’t leave me with a pocket full of change I have to deal with one way or another.

Instead of customers refusing to use cards for miniscule purchases, it would be more reasonable for all small business owners to get together and refuse to accept any cards for any purchases. There’s no rule against accepting cash only. They wouldn’t even need to put up a sign saying “cash only”. If they all did it, customers who would use a card to buy a Hershey bar would have to do without. Or they could go to Piggly Wiggly. Or they could stop at a teller machine and get some cash.
If you can’t be responsible enough to have cash with you, you don’t need that candy bar.
I can hear the whining now. :rolleyes:

Most UK stores have a minimum spend of £5 before they will accept a card payment, which I don’t consider to be unreasonable. What did amuse me the other day as I was standing in Subway waiting to be served, was the girl in front of me trying to add up how many of their bargain treats (meatballs, toasties etc) she’d have to buy before she reached the £5 minimum and could use her card. You could almost hear the cogs turning in her brain as she tried to work out whether three orders of meatballs at 99p per order was going to be enough.

Then people would simply not shop there, instead going to somewhere that does accept cards. Good luck getting walmart to stop accepting cards - they are big enough to not care about the pennies lost on a candy bar when someone uses a card.

Just think of the occasional pennies lost on unprofitable CC transactions as a cost of doing business - no different then keeping the place clean, heating it in the winter, or offering the occasional sale to attract customers.

I’ve noticed posted minimums are more common at stores with smaller average sales. A grocery store may lose a few cents by letting you buy your loaf of bread with a credit card, but they are more concerned about keeping you happy so you come back and buy a cartload of groceries the next week. Contrast this with a convenience store, where the majority of credit card transactions might end up being money losers, and returning customers are probably only going to make similar small purchases in the future.

It is interesting to see how times have changed. Historically there was a social stigma to using a credit card for small purchases, with the implication being that you were so broke you did not even have a couple dollars in your pocket. This has changed, though, as ‘electronic currency’ has become far more prevalent and accepted.

Even so, old habits die hard and I usually pay cash for smaller purchases, even if the merchant will accept a credit card.

Minor nitpick… They prohibit surcharges for using a credit card, but discounts for cash are okay, as long as it is very clear that it’s a discount for using cash as opposed to a surcharge for using a credit card.

http://usa.visa.com/merchants/operations/no-surcharge.html

I was just in a small store today that had a prominent sign reading, “No credit card purchases under \$5, please.”

There’s a very good family-owned restaurant near my home that has never accepted any credit cards. Nada. Zip. Once I forgot and had to hoof it down the street to an ATM, after we’d ordered our food, to have enough cash to pay for the meal.

Walmart is hardly a small business. Nor is PW. I think you misread my post.
And sweeping is , for me, much better than being coerced by a bank.

There’s a very large volume bakery here that has a retail counter (that’s a tradition) in the front. On the door there’s a large sign that reads “No Credit or Debit Cards, Cash or Check Only”. Word is that they’ve been hassled by CC companies about it. I’ll ask, if I remember.

…I didn’t realize Piggly wiggly was a real store. It sounds like something you made up to represent whatever random store was across the street :smack: learn something new every day.

Anyway that was the point, which I guess is the same as you made. People will just go somewhere else. I don’t see how that’s good for the small business at all, so why would they do it? All a small business card boycott would do is hurt small businesses.

As far as coercion, meh. It’s a service like any other. People wouldn’t visit the store if you didn’t pay to heat it - maybe they won’t visit your store if you don’t pay to have cards processed. What’s fundamentally different about that? The gas company profits off heating your store, the bank profits processing the card. Are you being coerced by the gas company because people want a warm store to shop in?

I’d be curious as to what they mean by ‘hassled.’ We get cold calls from CC Processing Companies, oh, I don’t know, maybe 3 times A DAY. And they get (or act this way) down right annoyed when I tell them I have no interest in meeting with one of their sales people. So I have to wonder if that’s what they mean, in which case, even people that already accept credit cards get hassled as well. Now, you have to remember, there are thousands of credit card processors out there. OTOH, if they mean Master Card and Visa are breathing down their necks…that’s kinda weird.

I often wonder why it’s not OK for merchants to have a surcharge for credit card purchases, but seemingly fine to instead have a “cash discount.” How is that not essentially the same thing?

And in any case, a shop owner is free to refuse any kind of payment they like - they 're not under any obligation to sell their stock to anyone.

I just called my music store owning friend and he said he is charged 1.7% on credit cards and 0.5% on debit. Add in the cost of paper (rolls for the printout are not cheap) and the cost of the machine and I think it adds up a bit. He is probably not a good example as he deals in expensive merchandise, but I can see how the costs would cut into the profit for a small mom and pop corner store.

On the other hand though, I wonder how much increased business he gets due to accepting credit cards? I don’t know how many times I’ve had to skip over a cash-only store or restaurant to go to one that accepts credit cards since I never carry cash.