In this thread, I mentioned that a friend of mine who worked for a major credit card company had told me that according to the agreement that a merchant signs with Visa/Mastercard/etc. in order to be able to accept their cards as payment, they are not allowed to set minimum purchase limits (i.e. the merchant cannot refuse to accept a credit card for the purchase of a pack of gum). If caught doing so, the merchant can lose their right to accept credit cards as payment.
Tuckerfan stated that he worked in a convenience store in which the credit card machine wouldn’t accept a transaction less than $1.00. This seems to be contrary to what I’d been told.
I searched around on google a bit, but I couldn’t come up with any solid Visa/Mastercard merchant regulations. I did find this link that goes to the Internet Merchant Agreeement, which appears to be an agreement between an internet retailer and a card service provider (though not Visa/Mastercard directly). This agreement states immediately in section 1.01 (Honoring Cards) that “Merchant shall not establish minimum or maximum transaction amounts.” The agreement also specifies that violating the terms would result in termination of the agreement.
Does anyone have any solid knowledge of Mastercard/Visa regulations on this issue? If the above is correct, why wouldn’t a machine designed to process credit card transactions be able to process an amount under $1.00 if that violates the merchant’s agreement?
As someone who worked retail and now works for a credit card issuer, I can answer both parts of the question.
First, the machines CAN and do process charges for under 1.00.
Secondly, the Visa/Mastercard merchant agreement does state that merchants can not set minimum purchase amounts. Sorry, no cite but I have it on paper in my office.
The thing to remember is that merchants violate the agreement all the time. Prime example, verifying the signature on the receipt to the signature on the credit card. Visa/Mastercard lets these little violations slide, but the larger violations will result in charging privledges being lost.
A fun example of this…recently the bank I work for decided to not allow charges for internet gambling to go through on our cards. (Too much fraud, merchants changing names constantly, not cooperating with customers re refunds/disputes, Congress yet to determine the legality of online gambling, etc)
>> The thing to remember is that merchants violate the agreement all the time
That pretty much sums it up. That is my experience with credit cards and travelers checks. Merchants get away with minor things because customers like me are not willing to go through the hassle of complaining.
Another question for hardygrrl: Can merchants ask you for a photo ID when using a check card? I was under the impression that the main selling point for using a Visa checkcard was that you didn’t have to provide any identification other than the signature when using, (otherwise people would just write checks.) Recently, however I’ve been asked a few dozen times to produce a picture ID when making purchases, which normally wouldn’t annoy me, but despite trying to have it changed 4 freaking times, my checkcard is still in my maiden name, and as a result doesn’t match the name on my DL. I’ve had a bunch of people chuckle at me and say “I’d rather be safe than sorry!” but I think it’d be pretty obvious that if I were out charging things on a stolen credit card, I’d be in Tiffany scooping up sparkly things, not $7 worth of shelf brackets at the hardware store.
I don’t have a clear answer for you now, but I’ll find out at work tomorrow.
FWIW, a true Visa checkcard-one that ties into a checking account-really should only require s signature verification if you use it as a Visa. If you use it as a debit card, requiring the entry of a pin, the pin is your verification.
Also, sophisticated fraud perps will test the card with small purchases, such as going to a gas station and swiping the card at the pump. If the pump says “pump gas”, they know the card has not been reported as lost/stolen.
It sounds to me though that the store you go to is just more security conscious than most. They may have been burned by fraudsters buying high dollar mechandise and decided as a blanket policy to request picture id from all customers using credit/debit cards.
The bank can and will get the money back from the merchant if we can prove they didn’t follow regulations and the charge is reported as fraud.
Thanks, hardygrrl…I’m glad to know that I wasn’t led astray. I can understand why stores try to get away with setting the limits, since a percentage of the transaction goes to the credit card companies…I just wanted to make sure I was correct in theory, in case I ever have to threaten someone who tries to refuse my transaction.
Anthracite, I often encounter the surcharge if I pay by credit card when I buy air tickets from discount agents. I believe that is not allowed either but, as we say, the rules are broken all the time. I used to argue sometimes when they asked for ID but I got tired and now I’ll just tell them they’re not supposed to ask for it but I show it anyway. Sometimes I leave the store promising myself I am going to write a complaint but by the time I get home watching MAD TV seems more important…
Why, hardygrrl, is it considered a ‘privledge’ to accept visa/mastercard when the service is paid for by the merchant? Isn’t the merchant the customer of these companies and the privledge more on the side of the service provider? No different than buying, say, a candy bar?
I don’t consider it a privledge to buy telephone service.
One of my local grocery stores requires a minimum purchase
of $10 to use a credit card! Since they have so many
customers, I doubt that if it were against the agreement
no one has reported them by now. Thus I am skeptical of
the prevaling notion here that you can’t set a minimum.
Perhaps in some states, or a minimum of $10 is ok, or
Why is it that some people refuse to show id? If it’s your card, then you’ve got nothing to hide. If it’s stolen, then the charges come out of my store’s pocket. You better believe that I’m going to ask for id for every card coming my way.
Not really. I’m asking the reasoning behind this. Requiring proof that a credit card belongs to the person using it protects both the merchant and the cardholder against fraud. I’m asking for a reason why this is forbidden by the Merchant Agreement. To me, it seems only logical. When writing a check, no one seems to have a problem showing id. In fact, it’s expected. Yet when they use a credit card, some customers get angry at being asked to prove that the card in their possesion is in fact theirs. Just having the card in your hand doesn’t mean it really belongs to you. To go by only a signature verification is insane. Give me enough time to practice and I could forge anyone’s signature well enough to pass it off as legit. A forged driver’s license, OTH, is harder to come by and probably not worth the effort. Again, I’m looking out for my store and my customers by trying to verify cardholder’s indentities.
I’d also like to say that I’ve never actually seen this contract, being as I work for a nationwide chain and I wasn’t the one who set up our account. But I do know that it is policy at all locations to ask for id when a customer is making a credit card transaction.
>> Not really. I’m asking the reasoning behind this. Requiring proof that a credit card belongs to the person using it protects both the merchant and the cardholder against fraud. I’m asking for a reason why this is forbidden by the Merchant Agreement. To me, it seems only logical
I can see reasons for and against but that is not the point here. The point is that either they can or they cannot do certain things according to the contract and those clauses should be respected and they often are not.
I can tell you that I often use travelers checks and they are not supposed to ask for further ID and they often do. What if i don’t have ID with me? What if I prefer not to show my ID? The reason is irrelevant. The fact is that I bought the travelers checks with the expectation that I could cash them with my signature. If you do not like the system you have it very easy: don’t use it. I use it with the expectation they will abide by the rules they have set.
If they tell me when I get a credit card that there are certain limitations on minimum amounts or whatever, then I’ll have to live with that, but if the contract says the merchant cannot do it, then they should respect it.
I was looking at my MC agreement and it is so full of lawyerspeak that pretty much you have no rights as a customer. They have the right to deny charges “for security reasons” etc without explanation or justification.
American Express, regarding travelers checks is very clear: “The merchant must observe the customer signing the Cheque. If the signatures are a reasonable match, the Cheque should be accepted. As always, if the merchant is unsure, they should call American Express with any concerns or questions at 1-800-525-7641” I can tell you for a fact that this is widely not respected and they will ask for ID.
You may not object to showing ID because “you have nothing to hide” and it helps deter fraud. This applies equally to cash transactions but I like my privacy. All the merchant needs to know is that American Express will honor that check and he does not need to know who I am or have any record linking me to the transaction. Indeed, one reason I often ise travelers checks is they offer a degree of privacy above that of a credit card. To the merchant they are cash and should be accepted like cash… i used to argue the point and win… but I got tired… now I mostly show my ID rather than suffer the stares of the people in line behind me at the grocery store.
You use Traveler’s Checks at the grocery store on a regular basis? WTF? Why don’t you use cash so there’s no paper trail at all?
In any event, I’m asking why people refuse requests for id with credit cards, not Traveler’s Checks. Although, they can be stolen as easily as anything else, so I demand id for those, too. Do you think I’m stockpiling lists of customer’s driver’s license numbers for my own nefarious purposes? What’s the big deal? Again I ask why no one has problems showing id when writing a personal check, yet they show malice towards being asked for id when using credit cards or Traveler’s Checks?
I’ll find out today once and for all Visa/Mastercard policy re: asking customers for id. As a fraud analyst, I’m all for it personally.
I did neglect to bring up a point re signature verification. This is why V/M wants those cards signed. Say you don’t sign the card and lose it. Someone else could find the card, sign it with your name and pass verification.
mangeorge, accepting credit card payments can increase sales. That’s why it’s considered a privledge. Think about it-if Circuit City only took cash and checks, do you think they’d move as much merchandise? Also, with a credit card, the retailer knows right away if the payment is valid as opposed to the wait to see if a check will clear. From the retailer point of view, the service charge is outweighed by the increase in sales and the knowledge they will get paid.