Rants on business, science, technology, society, politics, police, and justice, plus life hacks and tricks, since 2003. header image 2

Minimum Purchase on Debit/Credit Card Transactions

October 15th, 2006 · 61 Comments

[Editor’s note: this is all out of date as of July 2010 thanks to provisions in the Dodd-Frank Wall Street Reform and Consumer Protection financial reform bill that allow for minimum purchase prices up to $10.]

Last night I ordered out for Chinese food. My stomach and my wallet were calling out for General Tso’s chicken and fried dumplings. But I ended up pretty disappointed because of a misguided store policy at the restaurant.

This particular restaurant, Plum Blossom in Troy, NY, gladly took my order over the phone, but was less than happy to accept my Visa card when I arrived. Prominently posted in the store were inkjet-printed signs in front of the counter, on the counter, and on the wall behind the cashier, each affixed with clear packing tape. The signs read: “$15 minimum purchase on all debit/credit cards”. Egads, I thought; my order was less than $15. So when the cashier announced my total, I pulled out my Visa card anyway. He pointed to the sign and read it aloud.

I always carry some cash too, so I tendered up, but before I did, I asked, “So I can’t charge this, huh?” He read the sign to me again. I asked, “Do you know you’re not supposed to have minimum purchase amounts on credit card purchases?” He looked at me like I was retarded and asked, “What are you talking about?! We do; the sign’s right here.” I said back, “Just because you do it doesn’t mean you’re not supposed to, and I know for a fact you’re not supposed to.” And he said back to me, “Well we do.” Astounded by his persuasive abilities, I was more than happy to pay cash instead. But the blase attitude to my complaint was what made me more than happy to call my issuing bank when I got home.

Amazingly, the customer service agent I spoke with at my issuing bank agreed with the merchant. “I’m pretty sure they’re allowed to do that,” she said in an almost confident tone. “Are you sure, or are you guessing,” I asked. She paused and of course replied “I’d have to ask my supervisor to confirm that, sir.” I said that wasn’t necessary and decided I’d call Visa directly.

So I called Visa, and what happens? The person I spoke with also agreed with the merchant! I started to doubt myself. Did I just freak out at the Chinese restaurant guy for no reason? Was I on a sorely misguided but emotionally intense crusade not unlike a fundamentalist Christian neo-conservative supporting war? What happened last night?

Of course my close friends know that I’m never wrong, ever, and indeed, this held true yet again in this case. Right from the horse’s mouth:

Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. They also are not permitted to charge you a fee when you want to use your Visa card.

Visa USA – About Visa – Minimum Purchase
Frequently Asked Questions – Visa Corporate – Information for Merchants

And for those of us with MasterCard:

Another MasterCard acceptance rule prohibits merchants that accept MasterCard cards from establishing any minimum amount below which the merchant won’t accept payment via MasterCard card.

MasterCard Small Business – Frequently Asked Questions

So I was right! I’ve just encountered uninformed employees one after another. I called Visa back, but before mentioning that I had found their own policy, I explained my story again from the beginning and this time, the customer service agent emphatically said, “Oh no, they can’t do that [minimum purchase amounts].” He transferred me to someone in Montreal so that they could take an incident report. What this had to do with Montreal, I have no idea. In any event, the Visa agent gladly took down my name and the restaurant’s name. I didn’t ask what would happen to the restaurant owner, but I assume they’d send a warning letter first and then cancel their merchant account if they get another complaint.

Tough luck for me trying to use my Visa card, and tough luck for Plum Blossom getting called in for making it my tough luck.

Was the Plum Blossom requiring minimum purchase amounts to simply defy Visa policy? Probably not. In all likelihood, the owners said to themselves, “Self, these Visa merchant fees sure do add up! Applying Adam Smith’s economic principles, I should be minimizing my costs to continue to provide low cost to my consumer. Therefore, I will refuse credit cards on transactions in which I believe the credit card to be a costly form of doing business, and everybody will benefit.” Of course, I’m being maudlin, but the principle is probably true: that the Chinese restaurant simply would go out of business if they had to actually pay $.30 + 2.9% of my $12 charge (grand total: 65 cents) everytime somebody placed an order like mine. Again, I’m being facetious, but come on, if you’re going to take Visa, you’re obviously going to have to submit to their merchant fee gouging.

To the merchants that say, (French voice over) “Le sigh, but I have to pay so much money to zee Visa.” Tough luck. You don’t have to take Visa at all if it’s costing you so much money. But you take Visa because you want more business — specifically from people that use Visa cards! So take the damn Visa card, because you agreed to it. I charge almost everything because frankly, it’s more secure than carrying around an assload of cash. My credit card has been charged both fraudulently and mistakenly, and in both cases, the charges were righted in my favor. Placing a charge on some credit cards also doubles a manufacturer’s warranty or includes free theft insurance (check with your Bank — read your cardholder agreement unlike the merchant here that failed to read their agreement with Visa).

I won’t charge purchases under $5 generally because of merchant charges — I don’t want to impose that on small businesses, and I can actually understand that losing $.30 on a $1 or $2 transaction can make a sale a loss. The corollary to this is that I love using my card for minor purchases at big box stores. The true test: could I charge a penny. What better place to test this than a Walmart? At a nearby Walmart, I went to the candy section, and grabbed two peanut M&Ms — not bags of M&Ms, but two peanut M&Ms. I didn’t bother bagging it since I knew the candy shells would only melt in my mouth, not in my hands. At the self-service checkout, I proceeded through the menus to weigh my non-barcoded item, and per the machine’s directions, placed the item on the scale (only one — I ate the other, whoops!). The total: $.01. The form of payment: credit card. Indeed, the machine gladly authorized my card for $.01 and proceeded to print my receipt. The paper on the receipt and the duty cycle to the checkout machine probably almost cost that much, not to mention the heat that I let out the doors by walking into the building.

If costs of doing business get too high, raise your prices. No business would tack on a “receipt charge” or a “opened-the-door-and-let-out-heat/cold” charge, but we let merchants get away with “credit card fees”. The next time this happens to you, tell the merchant that they’re in the wrong, and see what they say. If they cave into your pressure and take your card, that’s all well and good, but someone will still be in that same scenario another time. Consider calling Visa and reporting the merchant. In this case, I only reported this restaurant because they were so complacent in telling me that was just their policy, but if they were pleasant it might have made me more hesitant to call Visa.

You can call Visa at (800) VISA-911 (847-2911), and MasterCard at (800) MC-ASSIST (622-7747).

Tags: Business · Complaint Department · My Thoughts

61 responses so far ↓

  • 1 Chris // Sep 27, 2009 at 9:40 am

    I’m pleased that you posted this article and provided relevant links to Visa and Mastercard. I went to a bar in Washington, DC that has a $25 minimum. Not only did I think this is atrociously high, but given all they sell is liquor and alcohol it encourages patron to drink more than they might have otherwise and potentially increases the likelihood of intoxication and drunk driving.

  • 2 bob // Oct 7, 2009 at 6:19 pm

    Perfect! I just about lost it today I ordered breakfast and a coffee, the total $4.63 the cashier said we have a $5.00 minimum purchase, I dug up enough change for my coffee and said forget the rest . I knew it wasn’t right but nothing to back myself up. I can’t wait to go back there, say goodbuy to 50.00 to 75.00 dollars I’ve been spending for breakfast and lunch not to mention the other 30 or so coworkers on the construction site that I will pass this onto. Way to Go GET N GO in Durham , Maine

  • 3 Jeff // Nov 18, 2009 at 11:52 pm

    I work at a bar and grill in california and my boss just started a 20$ min for costumers who want to pay with credit cards.
    I dindnt think it was a big deal at first, till a reglur costumer told me that bussness owner are not aloud to do that, so I found this site and read all the comments, and was suprized how many people are up set with is issue.
    I dont wan to be the bad guy I just do what my boss tells me to do.
    Its been about a week scense my boss started to do this and had one complant aready, Iam sure there would be many to come.
    He also just put an atm machine in the resturant so iam suspose to till costumers to use the atm if the dont have more than 20$ on them, but like my self I dont like using atm’s that are not owed by my bank.
    All well I just go to my job and deal with it, if a get yelled yet.
    Fot the costumers is not my fault sorry guys.
    Thanks for this site.

  • 4 Kipp // Mar 13, 2010 at 9:50 am

    Peace. First of all, let me start by disclosing that I am a business owner and have been for years. I’m a tax account, though…not a retail merchant. I’m aware of the various dynamics that lead to the dissenting views in this discussion.

    That said, I’ve been angered by a local (Robbins, IL) gas station’s NEW policy that denied me service because I didn’t have any cash on me. It’s not that I haven’t seen this before. I live in a very poor community, and this practice is common in the hood. A community so poor that we were jumping up and down while the gas station was under construction. Recently, our library was in danger of shutting down until native NBA superstar Dwyane Wade’s charitable foundation stepped in (Thanks, Bro). And, everyone I know in this community visits the gas station regularly. I’ve stopped their regularly since its inception a few years ago.

    But now, all of sudden, my money isn’t good enough if its below a certain amount. The reason I’m angry is because it doesn’t matter that I’m a regular and faithful customer. It doesn’t matter that they made the (sound) business decision to open in a poor neighborhood. It doesn’t matter that they made the (sound) business decision to accept debit and credit.

    And, that’s kinda my point. This company received very favorable tax (mostly local) considerations to be convinced to set up shop here. It made good business sense to decided to accept credit and debit cards. It is never a net negative transaction. Not Ever!

    So stop with the stand up for the little guy nonsense. Because, I am. The owners of this gas station do not live in this community. And, their contribution to the local economy has been negligible to this point. No one who lives here works there. And, I already mentioned the tax considerations.

    It just FEELS (my admission of a hyper-emotional point of view) like an outsider has the only show in town, and is leveraging their monopolistic powers to extort the people of my community. I felt powerless with my $4+ handful of needed (mostly caffeinated) goods and no other choice but to buy something else.

    And, as I alluded to before, this practice is common in poorer communities. And, I do understand the economics of these transactions. Heck, there’s another smaller store in my town that has a minimum fee. It’s more centrally located, so it doesn’t benefit from the “drive thru” traffic the gas station has from its location on a busy corner. They’re minimum is only $3. I try to go with cash when I can. But, when I don’t have the cash on me, I spend the minimum and then some, usually while feeling grateful that I could use my debit at such a low-budget (affectionately referred) operation. I’d imagine that the owners of this location are from the same neighborhood as the gas station owners. That’s said this “Corner Store” FEELS more like a part of our local community. This much lower sales volume store even hired a neighbor of mine to work at the store. He takes his granddaughter to work with him on the weekends and she hangs out behind the counter with the store owners. They hire random crackheads to do odd jobs around the store.

    While the gas station is blaring the popular “urban” radio stations over the PA, this store keeps their one TV locked on Al-Jazeera. Yet, shopping their still feels local.

  • 5 Minimum Purchase on Debit/Credit Card Transactions … | Jack's Money Saving Blog // Mar 25, 2010 at 10:10 am

    […] from:  Minimum Purchase on Debit/Credit Card Transactions … Share and […]

  • 6 robert // Aug 14, 2010 at 2:30 pm

    This happens all the time at gas stations. Especially those owned by Middle Eastern folks. I went into one and they said “Five dolla minimum”. I said “You can’t do that, it’s in my cardholder agreement, you can’t do that, it’s against the rules! I am going to report you!”
    I called VISA 911 number and they were glad to take my complaint and asked what result I would like. I asked for the gas station to be fined! So any time a company tries to do this to you call Visa or Mastercard and report them and ask for them to be fined!

    [Editor’s reply: Thanks for taking the time to share your experience. If everyone reported every merchant that did this, I’m sure this practice would stop. Since I wrote this article, my policy has been only to report egregious merchants – ones with unreasonably high limits (saw $15 minimum recently in NYC, and hell yes I reported it), ones who try to slap on fees to cover their fees, or those who are just flat out rude about it. Interestingly I recently learned the state of New York’s taxation department skirts these rules by accepting credit card payments only through third party vendors who charge a “convenience fee”. Jerks!]

  • 7 kay Thompson // Aug 24, 2010 at 8:18 am

    A merchant told me that we will no longer be able to use cards for purchases $10 or less. He said it was some kind of new law that was going into effect soon. So I googled the subject and found this website. I clicked on the link above and it says retailers may require a minimum purchase amount!!! The exact opposite of what this site is talking about! I copied and pasted the blurb below:

    Minimum Purchase – U.S. retailers may require a minimum purchase amount on credit card transactions. The minimum purchase amount must not exceed $10 and does not apply to transactions made with a debit card.

    [Editor’s reply: It’s one thing when a merchant sucks it up and says, “it hurts our bottom line,” it’s a whole other thing when they try to pull fleece over your eyes telling you about some new “law” just to excuse their behavior.]

  • 8 amanda owens // Feb 21, 2011 at 8:05 pm

    lmao.. really i would wanna see a merchant server come fine or shut down a business. they will say that they will, but will NEVER do so. they lose business and business is money.. there money is more important than a call in about a 10 minimum charge. i guess you guys are not business owners so you wouldnt know. also if a business dont accept credit cards, it just makes you stop at the atm to pull cash out and then the merchant will even love that more.. cuz its cash. im not a merchant but i was reading and wanted to put my 2 sense in.. smh!! lol. btw walmart is a big corp they have money and you can swipe all day for all they care, but be considerate to other small business owners. but anyways i feel that way sometimes when i go to places and they do that. i always carry cash. and another thing is when you use your credit cards now a days, some people swipe or steal your card and someone else can be using it at the same time while your eating or sleeping. i guess what im trying to say is everyone needs to choose there own battles of what they like to fuss about…. why live life the way you guys do.. loosen up and live it to the fullest. who knows when you will die. over a 10 minimum.. hmmmm

    [Editor’s reply: Actually, I have been in business for myself since 2008, and although I am not in retail, I do appreciate the plight of small businesses versus the credit card networks. However, this entire article is all moot now – Federal law now prohibits credit card networks from disallowing minimum credit card transactions. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Electronic Fund Transfer Act of 1978. Prior to this, merchants were required by law to accept transactions as small as $.01 (one cent). So, I’ll quit worrying about minimum purchases if you do too! We have to just accept that now that the law is on their side, that’s just the way it is until further notice.]

  • 9 jASON kELLER // Jun 25, 2011 at 3:55 am

    Yeah looks like Visa (but not Mastercard) has caved and said that MPRs up to $10 are okay.

    [Editor’s reply: This all changed with the passing of the Dodd-Frank Wall Street Reform and Consumer Protection financial reform bill in July of 2010. I’ve updated the top of the article to make it clear that it’s now out-of-date.]

  • 10 Jim Foster // Jul 29, 2011 at 7:07 am

    MC charges 1.75% plus .12c on every transaction.
    Discover 1.89% plus .15c on every transaction.
    All debit .60% plus .18c on every transaction.
    Its ridiculous what the merchant companies are charging, and the government is allowing it to happen. Time for reform. I have a simple solution, I quit taking cards at my stores put in a ATM and my business is booming, At first customers were mad now they agree I love it… Comsumers assume it is the retailers that are screwing them do the math I’m selling you a .99c bottle of soda how much profit do you think i really make on it and the merchant company charges me 1.75% plus .12c..

    [Editor’s reply: As a fellow small business owner, I think this is a fair and appropriate response, but one that each business owner has to weigh the benefits of themselves. Personally, I continue to accept credit cards, however, my business (computer services) has both a high price and high margin (since the “product” is generally labor by the hour). On the other hand, my favorite pizzeria did exactly what you said: replace their merchant POS with an ATM. To be fair, I never use ATMs or debit cards, so there have been times when I went to another pizzeria because I didn’t have the cash. However, I’m more than happy to support their choice to run a cash-only business and more importantly, the owners seem to be happier all the time – probably because they’re making more money now!]

  • 11 Mr. O // Nov 8, 2011 at 10:08 am

    The link says… so it would seem that they can charge a minimum purchase amount. I also agree with the implied idea of the author that we should be at least somewhat reasonable with small business owners when the amount of the minimum purchase is reasonable. If I spend a $1 and visa takes $.30+29%…the business owner just lost took a huge hit. It adds up.

Leave a Comment