Visa: Minimum Purchase Requirements Not Allowed
Have you ever tried to make a small purchase using your credit card, only to find that the store owner had a minimum purchase rule in place? Many of us assume that such rules are legitimate, and so we buy things we possibly don’t need in order to meet the minimum purchase amount.
But according to Visa and MasterCard, such minimum charges aren’t allowed in their terms of business. Merchants who accept Visa and MasterCard are not permitted to set a minimum amount for which the card can be used as payment. Nor can they tack on fees for small purchases. American Express allows minimum purchase amounts, but insists that merchants impose those amounts on all the credit cards they accept. Since Visa and MasterCard won’t permit that, and since most merchants accept those cards, you can bet that most minimum purchase amounts are bogus.
The merchants who impose these rules often don’t know it’s not permitted; they are simply trying to recoup some of the fees they pay for credit card processing. Still, some consumers don’t like the rule. One irate customer even complained to Visa, who responded with a letter stating that the practice wasn’t allowed. He now shows the letter to any merchant who insists he make a minimum purchase to use his credit card.
N. S. said,
December 13, 2007 @ 7:06 am
Very true! I often encouter this at mom and pop shops in NYC. After imploring the merchant to “make an excception” so that I can get out of there I often fail and just call (outside the shop) my card issuer (# on back of card) and they happily take the merchant’s name and address. They tell me they send it on to MasterCard or Visa so that those companies can contact the merchant via the merchant’s bank. The merchant gets fined after more than one report in a certain time frame. If the merchant don’t like the fees don’t take credit cards. Though we are going to a cashless society so it would not be a wise business decision to do so.
Tom Mahoney said,
December 13, 2007 @ 8:46 pm
You are quite correct - minimum purchase policies are not permitted by Visa and MasterCard. Why would they care - they get 1-3% of every sale plus a per transaction fee that is usually $.05 - $.15.
If a cardholder purchases anything less than a couple of dollars worth, you can figure the merchant makes about $.50 profit before credit card fees. The fees eat up almost half his profit. On a $2.00 sale, the merchant makes $.29. Sorry, Visa, we can’t make a living that way.
Tom Mahoney
Director, Merchant911.org
Developer, PreventChargebacks.com
Saafan said,
April 6, 2008 @ 12:55 am
I agree with no minimum payment with a credit card , this sounds a merchants invention , bad one though, well, the processing fees are applied per purchase on percentage basis; thus not related to how much is the amount, lets say on a 2% per purchase , makes the processing fees on a 200 $ purchase =4 $ , and in another purchase with 2 $ which will be 4 cents , no big deal , merchants are not making any sense with those limits
C said,
June 29, 2008 @ 6:41 pm
Hate to tell you it is around 2% per transaction. PLUS the flat rate fee and if it is a business card or a rewards card it process at an even higher rate. OUt of country cards too process at a higher rate.
business owner said,
November 13, 2008 @ 9:37 pm
I am a small business owner. I own a bar and it costs a lot more than just fees to accept a credit card on small purchases such as one drink. It costs me in sales/customer service and supplies. First as far as supplies I have to pay for the rolls of paper and ink to print the charge slips (and if you think computer ink cartridges are expensive….). Also maintenance on the machine. Plus the phone line (which is also the main bar line). As far as sales and customer service, I am loosing money having a bartender tied up (plus the phone line)running a charge for one drink. It takes time away that she could be making and serving drinks. I know you’re probably thinking that you are a customer and if that was the only circumstance I would take cards for any amount but that is not how it works in this business. I get customers who want to pay by charge everytime they order a drink. When we have happy hour our drinks are $2.00 and under…therefore I have to pay a transaction fee and a % of the sale on each drink they order….along with the time consumption of my employee and the supplies etc. I come out in the RED. Other types of expenses to a small business owner like myself are ….. As a courteousy we let customers run tabs. We ask to hold a dr license or credit card for our protection. We have been burned so many times on walk-outs (they leave without paying their tabs). We check the cards expiration dates to be sure they are valid but we lose out when they are stolen or declined. The initial transaction goes through and they deposit part of the sale amount minus the many fees (transaction, % of the sale, plus more of a % on speciality cards ie. rewards, mileage etc.) into our account. Unless we can send in a valid charge receipt w/signature, If the card was stolen we get a charge-back where they deduct from our account the full amount of the sale plus another fee (so now we are out the sale amount plus all the fees), . Of course, there are no signatures if someone walks out since the card was stolen . If someone walks out on a card that ends up being declined, I lose the amount of the sale and still have to pay transaction fees even if the card is denied. Even if the person is still there and the card is declined and they say it’s impossible run it again; every time we run that same card we are charged another seperate additional transaction fee.This can cost (and has in my type of business) a lot of money, not only in fees but loss on sales to pay for my overhead (rent, salaries, electricity, water, etc) and the inventory (liquor, mixers, straws, etc.) plus I need money to get new inventory to be able to try to make money to cover my losses and fees. How am I supposed to survive? What is so bad about having a minimum charge or a service fee for under a certain amount when someone is using a charge card it helps me the small business owner. Would you rather we raise our prices?? Then everyone would be paying more just so people could charge a small amount on their cards. How fair is that?? I now have to pay a $5.00 delivery gas charge when I order my liquor or other supplies is that fair to me…but I didn’t change my prices, I eat that charge myself. Accepting charge cards is a courteousy that we pay for for our customer’s convenience; therefore why shouldn’t we be allowed to set a minimum on charges; instead of it costing us more money. We all know the major credit card companies make their money on the fees from businesses that accept them and from the consumer (which I also am) that uses their cards in fees and interest. So please stop going after the small business owners who are struggling to make a living and survive against these major companies that are gouging us which ever way we turn. Go after them not the small mom and pop businesses.
Ali said,
November 19, 2008 @ 5:52 pm
I’m sorry, but I think that its retarded to charge a small transaction. If you want to buy, say a bumper sticker(i work in a mall kiosk) for 1.99, and charge it, you don’t need to be getting the bumper sticker. Point blank. I have done this, and my boss told me to tell anyone who wants to charge that small of an amount to tell them that our credit card machine in down. People don’t get mad, and we actually get to make money.