I heard somewhere that it is illegal for somebody to charge you a .XX fee to use your card as well as forcing you to have a minimum purchase to use your card. Is this true or does it only apply to debit/or credit?
It isn’t illegal, but it typically is a violation of the agreement between the merchant and the card network. For example, here are the rules for Visa.
Can i reoprt them to visa?
The visa website says the following:
Basically, report them to your issuing bank. In practice, I have no idea how effective this will be.
When I worked for a credit card issuing bank, I got a few calls from customers to report this practice. We had a contact number for VISA that we would call and report the information to.
Where it went from there is anyone’s guess. I would imagine that VISA takes this kind of stuff pretty seriously, though.
I would think so too, but I have noticed that the minimum purchase amount seems to be fairly common with gas stations and food court stores.
Could be that consumers aren’t aware that such minimum purchases are prohibited by VISA’s rules, and thus aren’t reporting them. In my lifetime, I’ve only ever encountered this once–at a gas station while making a purchase inside–I reported them for it. A few weeks later, I noticed they had stopped doing it. Could have been entirely coincidence, I dunno.
VISA’s rules do allow for “cash discounts,” so that may be how some places get around it. But it has to be advertised as such to qualify:
Are you somewhere near a college campus? That’s the only place I see this sort of thing in the US any more.
I presume the rules may differ in other countries? I saw lots of credit-card minimums at shops in Australia.
The gas station/convenience store around the corner has a $5 minimum and I haven’t taken it up with my card issuer since it’s the only store available in the neighborhood after 7 PM and I can’t risk it. 
I did see a lot of miminums in NYC and was surprised they didn’t have them when I moved up here.
No, I have seen this at many gas stations around Atlanta. It might be different now as it has been many months since I have bothered going inside the store at a gas station, since if I did it would be to buy a Coke or something that wouldn’t meet the minimum, and I usually don’t carry cash.
I’ve called VISA International and reported a merchant with a ‘credit card surcharge’.
I did that after the customer service folks at Chase had no idea how in the hell to process my complaint, and gave me the number for VISA International.
The nice Indian who took my call asked me to call my issuing bank.
I explained that I had, and that they had told me to call him. After that, the nice Indian fellow took extensive notes, and a week later I received a letter from some kind of Director at VISA which indicated that they were investigating the matter. He also noted that cash discounts are permitted.
I’ve been hearing about this issue for years.
It is against the rules for merchants that accept VISA, for example, to require minimum purchases for customers to use the cards. You are encouraged to complain to VISA if you see such practices.
However, and it’s a big however, there is very little evidence that VISA actually does anything to the merchants after it receives such complaints. My suspicion is that in the vast majority of cases, they’d rather go along with a merchant’s technical violation of the rules than lose the merchant’s business entirely.
Ed
What is the difference between a cash discount and a credit card surcharge?
If item X costs $10 in cash and $12 on a credit card, is this a discount for paying cash (which is permitted) or a two dollar fee for using a card (which is a violation of the rules) ?
Practically, there’s often not much difference, except how it’s posted/advertised. However, if the store takes any other form of payment (like checks) they have to give the cash discount to cash-paying customers only.
This has been extensively discussed before: A Pit thread pitting “Mom & Pop” stores that require a minimum purchase for Visa users went to 7 pages, and simultaneously there was a three-page thread about reporting a store for adding a credit card surcharge.
In California it is illegal for a store to charge extra for using credit, as provided for by Civil Code Section 1748.1 . They can offer a cash discount, however. I’m going to guess it’s not prosecuted often, although the treble damages for the surcharge are assuredly negligent, the lawyer’s fees you’re entitled to collect probably will not.
In some place it IS illegal to charge a fee for credit cards, usually the government (like the IRS and religious and charities are also exempt from that law)
In reality there is little to nothing you can do to enforce it. The worst Visa could do is pull their machine, which they won’t. They just give the consumer the run around, tell your bank and so forth. It would be a very easy matter for Visa to simply verify a charge, (most owners would tell you so) and have Visa stop the approvals till the practice is stopped.
But Visa would lose money so they don’t. And it’s not only Visa the other cards are like that too.
I’ll tell you what, I have 3 establishments on my way to work that put surcharges or minimums I’ll report all of them tomorrow and we’ll see if anything gets done.
(They are usally Subway franchises and video stores, so I’ll report them to Visa, my issuing card bank and the franchise owner to see)
Some years ago, I worked for a CC processing agency, which DID charge a per-transaction fee (like $1.75, I think). How this would work out with (major CC company), I couldn’t say, but we had a LOT of merchants subscribing to us, and these were mostly smaller businesses. The biggest single account was some rent-to-own chain. I think we mainly did some contract work wherein we supplied the hardware and customer service and didn’t annoy the actual issuing banks.
I don’t encourage my tenants to pay by charge or debit card, but will accept them as a convenience to them, as long as they understand they are responsible for all fees, which comes real close to 4%.
Maybe the difference in my case is that I use a third party card processor, since I’ve never suffered any repercussions.
Nope, you’re allowed to do this, per Visa’s rules:
The only part that stands out to me, in your case, is that it “is applied only to non face-to-face transactions.” If you’re covered there, it sounds like you’re covered with your convenience fee.
I’m not sure if you’d have trouble with the “is assessed by the merchant that provides the goods or services to the cardholder and not a third party” part, too, but I’d argue that you’re being charged a transaction fee by the processor, and your tenants are being charged a separate but equal fee by you.