Does anybody know if accepting american express with a fee is against their contract, and if so can I find a place to report a business?
Oh come on. Refusing to honor one part of your contract is civil disobediance? Suppose your landlord decided her didn’t like spending so much on trash disposal, and stopped doing it? Hey there’s rules and then there’s rules. If you don’t want to abide the terms of an agreement, don’t sign it.
Alternatively, you could post a sign out on the street warning potential consumers that you require a minimum purchase with a card, instead of telling them once they’ve come inside and waited in line for ten minutes. But I suppose if I could read it, so could the credit card company reps.
I was delighted when a locally-owned small grocery store with excellent produce started to accept credit cards a year ago or so (prior to that it was cash or check only) and I immediately started to pay by credit card (purely for the frequent flyer miles). But after a few weeks, they placed a sign by the swipe machine indicating that they’d prefer if you used a debit card because of the high cost of the credit card transactions. Since I like the store, I stopped using my credit card and returned to paying cash. I’ve watched people use credit cards there without anything being said by the cashiers, so they don’t seem to discourage it.
So this seems like a nice compromise between having a minimum for credit card purchases (in violation of the Visa/Mastercard agreements) and not accepting credit cards at all.
Since Bambi hasn’t been by to field this, allow me.
In general, a merchant agreement forbids the vendor from requesting and ID with a CC purchase. However, if the signature is absent, the vendor may request ID and ask the cardholder to sign the back of the card, if his merchant agreement so allows. Ditto for cards which have “SEE ID” in lieu of a signature, and cards on which the signature is worn or faded to the point of illegibility. If the cardholder refuses, the vendor may decline the transaction; in fact, a vendor may decline to accept a CC for any reason if he suspects the possibility of fraud. In such a case, the merchant agreement normally recommends the vendor phone in the purchase as a “code 10”, which alerts the representative on the phone that the purchase may be fraudulent. Of course, the vendor can always opt to accept the transaction anyway without checking the ID to validate the signature or phoning in a “code 10”, but if the cardholder contests the transaction, a chargeback will almost certainly ensue–if a vendor is charged back too much or too often, the CC company may prohibit the vendor from accepting further CC sales. In order to avoid chargebacks, the vendor needs to prove that he followed the CC acceptance procedures as outlined in his merchant agreement. Of course, merchant agreements can vary somewhat in some details, so the above is just the general case.
Well, now, that’s my whole point - some rules need to be followed, others can be bent or broken. People wouldn’t stand for not having trash disposal, and it’s fairly essential service. Most people can abide not using a card for a small purchase, and it’s not really necessary to provide that service.
People bend and break rules all the time. They go over the speed limit. They take 11 items to the express checkout with a limit of 10. Most people will push the envelope on restrictions that they don’t see as particularly necessary or reasonable, when doing so produces a tangible benefit. I think that’s what’s going on with merchants who have the policy we’re discussing.
I’m just trying to provide what I think is the merchant’s perspective. To put it in blunt, raw, terms, it might be like this: “Jeez, why is this jerk busting my balls using a card for a few dollars? It costs me more and takes more time to transact. I don’t mind that when I’m making a few bucks on the deal, but this is costing me disproportionate to the sale. What, he can’t carry 5 or 10 dollars in his pocket?”
I’m not saying this is the final, “right” way to look at it, just explaining it probably is how some look at it. This situation will probably evolve into some sort of resolution. The trend seems to be toward using cards for everything, and customers and merchants will adapt to whatever the future brings.
I think it’s disingenuous to say “That’s in the contract, abide by it.” It’s a minor point, and there’s a reason it’s not always abided by. No merchant is going to give up all credit card sales just to get around this. They will, obviously, post a minimum limit to try to get around it. If the card companies crack down on them, they’ll find another way, most likely raising prices in some way.
The merchants may be forced to acknowledge that catering to customers’ desire for convenience is more important than cutting losses this way. I think it would be helpful for customers to acknowledge that what may seem “absurd” has a rationale behind it.
Just to add on the above since I was asked several times.
Cash back
No ATM fees (what’s a ATM?)
Reduced trips to bank (or that ATM thingy)
Reduced risk of carrying cash
(along with many other things listed)
And the biggie:
My company pays (if business related), which means it costs me zippo, but if it’s too small and I pay cash it’s not worth my time to put in for it.
St. George/BankSA actually 
But even here in SA, the ATMs are getting a bit hard to find, and I do get belted for fees for using non-bank ATMs, so I just try to avoid it when I can. St George are pretty crap on fees, ever since they changed their schedule a couple of years ago, but I’m too damned lazy to pick up my details and go somewhere else.
I think you’ll find that a merchant who goes out of businesses by losing money on every transaction isn’t doing you any favors. Do the math on a small transaction. Let’s say my merchant account charges 40 cents plus 3% on each transaction. On a $20 sale, that’s a buck–five percent–a livable (albeit annoying) amount. On a $1 sale, that’s $0.43. For a business operating on a tight margin, it’s better to turn away a customer than lose money by taking a 43% hit to your gross income.
Having a $15 minimum credit card purchase would certainly piss me off, but I wouldn’t begrudge anyone a $5.00 minimum. Personally, I don’t impose minimums because I have so few items in my store that cost under $5.00 these days.
It’s the maximums that really frost my cake. I bought a truck last year, and I was looking forward to using my whole limit on the card (20 grand) so that I’d rack up the frequent-flyer miles. The dealer has a maximum $5,000 credit card limit, so I had to pay the rest with a check. I understand that he didn’t want to lose 2% of 20 grand ($400 is probably a sizeable hunk of money), but I really wanted those miles.
If you’re wondering why I used 3% in the first example and 2% in the second, credit card companies set rates individually for each merchant, and they’re at least partially based on the average transaction amount. A car dealer will pay a lower percentage than a coffee shop.
Can anyone actually provide a cite demonstration that they do have such a stipulation? I don’t have my Visa/Mastercard contracts handy, but I just read my Amex and Discover merchant agreements, and neither one forbids a minimum (or maximum) purchase limit.
Quoting directly from the contract I signed with American Express: “2.a.c: You must not … (iv) impose any restrictions, conditions, or disadvantages on the use or acceptance of the Card that are not imposed equally on all Other Payment Products.” Plugging in their definitions, it effectively says that you can’t charge a surcharge for Amex cards unless you also charge it for all other credit cards.
From the Visa USA site (WARNING: big-ass PDF):
Thanks, Q.E.D.
I wish I’d had that along when I bought my truck!
Absolutely right. I’ll take it a step further: A business that stays in business isn’t doing me any favors, either. Just trying to make a buck like anyone else.
However, if I budget an extra 10 minutes into my morning commute to get one decent cup of coffee to drink while I read my e-mail, and I burn that 10 minutes only to be told that I have to load up on a bunch of crap I don’t eat in order to get that cup of coffee, then that business is actually inconveniencing me. If the minimum were posted in the window, next to MasterCard/Visa stickers, I wouldn’t mind. But because it’s a violation of a contract, I will never know until it’s too late.
Every place I’ve ever been with a minimum has posted it prominently near the register. Furthermore, they are nearly all places like coffee shops that cater mostly to regular customers. Further furthermore, it’s only prudent to carry at least a couple bucks on you- what the hell are you going to do if your car breaks down and you have to take the bus home, or if you take a wrong turn and end up going over a toll bridge, or your cell is out of range and you have to make an emergency phone call? Situations just like this are a good argument for putting a few folded ones in your wallet in case something unexpected happens.
I’ve never seen that to be the case. Not in a coffee shop, and not in at least a dozen bars.
And therefore it’s okay to inconvenience anyone else?
What I ought to carry in my wallet has no bearing, since I would not spend money I keep for emergencies on a cup of coffee. However, I was issued a calling card that enables me to charge a call from a payphone to my home number when I got my current phone. I have that in my wallet, along with the number of a service station. If my car broke down I would not be inclined to leave it there and hop a bus. Also, in my agreement with Mastercard, it specifically says that merchants cannot require a minimum purchase, so I expect to be able to use it just like cash.
It’s one thing to carry some extra cash for emergencies, but that’s not really the scenario here. For regular everyday purchases, using cash is a big hassle and benefits only the merchant.
If the merchant is going to impose a minimum/maximum, well, I won’t report them or ask them to stop – I do understand that the CC companies charge quite a fee – but if the shop next door offers similar things and DOES take credit cards, well, I know which one I’ll go to.
And thats the thing isn’t it? People generally don’t complain or kick up a fuss if a shop doesn’t cater to their needs, they just go shop somewhere else. The merchant may think, “well I don’t need no stinkin credit carders costin’ me money just buying one coffee on their card.” But they may then find that the people who just want a coffee are the same people who want to buy more expensive things as well, but don’t bother because the shop isn’t convenient for them.