No 'minimum purchase' requirements
You stop at the neighborhood grocery store on
the way home from work to pick up some milk, fresh spinach, tomatoes
and a chunk of Parmesan cheese. The tab comes to $11.24; you've
only got $10.
No problem. You whip out the credit card and
hand it to the cashier.
He points to the small sign taped to the side
of the register that says, "Credit card purchases -- $15 minimum."
Great. Now you either have to drop an item or buy more than you
want so you can use the card.
Did you know that retailers aren't allowed
to set a minimum purchase amount for Visa
or MasterCard? It's not
illegal -- it's just not allowed in their contracts with the card
"As long as it's not a widespread problem,
I don't think you'll see a lot of enforcement," says Scott Strumello
of Auriemma Consulting Group in Westbury, N.Y.
But it does seem widespread.
No bubble-gum purchases
Most people have at least seen those little signs that say you have
to spend $10 or $15 or maybe even $25 if you want to use a credit
Auriemma Consulting surveyed 500 consumers
and found that 17 percent had been told they needed to purchase
a minimum amount, says Strumello.
"You're most likely to see minimums in a small
independent retailer," says Strumello. "You won't see it in a major
retailer. In independently owned shops where cost is a more significant
factor, a merchant is counting every penny and transaction costs
A Juno Beach, Fla., store owner, who wishes
to remain anonymous, says the transaction costs for accepting credit
cards are "totally unfair" to small retailers. "At the end of
the year, it could cost a small business $2,000, depending on how
much volume you do."
The costs to merchants
John Mayleben, vice president of sales and marketing at the Michigan
Retailers Association, which processes credit card transactions
for store owners, says there are two main fee components when merchants
accept credit cards.
"The interchange fee is usually expressed as
a percentage: maybe 2 percent. If you have a $2 item or a $2,000
item, that 2 percent is the same. Most credit cards also have a
transaction fee: maybe 10 cents per transaction. Obviously, if you're
selling $2 items that fee is a lot bigger than if you're selling
The bank that issues the retailer a credit
card account usually charges the transaction fee. It's another slice
of the pie the retailer has to give up for accepting a card, which
is why they say it's not worth it to let customers charge a buck
"We have people come in here and want to use
a credit card for a glass of juice," says our anonymous retailer.
"In reality, it's a violation of the contract,"
says Mayleben. "But there are a lot bigger fish to fry than (a small
store) on the corner. If the folks from Visa or MasterCard were
to knock on his door he'd be told to stop or lose his ability to
Mayleben says the fees aren't unreasonable.
"The merchant designs a profit margin into their
product to cover that fee. The Post Office did a white paper before
putting credit cards into their system so you could use them to
buy stamps. They calculated the cost of handling cash and checks,
and it was similar to handling credit cards."
You probably shouldn't be seeing too many places
pushing minimums for American
Express or Discover
cards, either. According to Strumello, those two cards allow minimums,
but only if minimums are applied to all cards the retailer accepts.
In theory then, anyplace that accepts MasterCard or Visa wouldn't
be allowed to set a minimum for American Express or Discover.
Minding the minimum
Visa says its bylaws clearly state that merchants must not establish
a minimum transaction amount. That's done, "To protect Visa cardholders
so they can expect to use their cards anywhere, anyhow and anytime
Visa is accepted," says a spokesman.
"If Visa finds out about a violation, Visa
will issue an enforcement letter to the acquiring bank that enables
the merchant to accept the card. It's up to the acquirer as to how
to deal with the merchant."
MasterCard is also emphatic about dealing with
violations although MasterCard deals with them directly.
What you do the next time you're told there's
a minimum to use a credit card probably depends on how you feel
about the issue. If you're sympathetic toward the merchant's plight
you'll save the card for bigger purchases.
On the other hand, if you're trying to rack
up every cent on your credit card for more frequent flier miles,
you might rustle up your best steely eyed gaze and say, "That's
If you'd rather complain with less fanfare,
write to Visa at firstname.lastname@example.org.
MasterCard complaints will be accepted at 1-800-300-3069.