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Credit Card Minimums – Are They Allowed?
Credit Card Payment
Purchase Minimums – Are they Allowed?
By Emily Shap
Have you ever walked into a convenience store, or gas station and have been told that you must purchase at least $6.00 worth of goods to use a credit card? You understand the business owner’s rationale behind the minimum requirement, but wonder if it is legal. The answer is “no,” it is not legal. This practice of charging minimums (or maximums) is not allowed by any card association and is in breech of the business owner’s merchant account agreement.
According to Visa’s Card Acceptance and Chargeback Management for Visa Merchants, “Always honor valid Visa cards in your acceptance category, regardless of the dollar amount of the purchase. Imposing minimum or maximum purchase amounts in order to accept a Visa card transaction is a violation of the Visa rules.”
If requiring minimum purchase amounts is not allowed, than why do merchants continue to do so? The merchant may be ignorant of the violation, or simply ignoring the merchant account rule to counteract the cost of processing such a small sale. Regardless, merchants requiring minimums can be reported to the acquiring bank by their customers. Acquiring banks will require that the violation be resolved immediately. Continued violation of the merchant account agreement could result in termination of the merchant account.
Merchants who are operating on small profit margins and anticipate numerous small dollar credit card transactions could offer a cash discount to customers instead of requiring a minimum purchase amount. Card associations strictly prohibit credit card minimum (or maximum) purchase amounts, but allow cash discounts.
There are rules to offering cash discounts. The cash discount must truly be a “discount” off of the regular price. The regular price is the amount paid using any other payment method. The regular and discounted priced must be disclosed and visible to customers. Contact your
Minimum Charge on Credit Card Purchases Right or Wrong?
Are minimum charges allowed on credit card purchases? If you answered no, you are 100% correct. Card Associations strictly forbid minimum charges on credit card purchases. Failure to comply with these regulations could cause a merchant to lose their merchant account.
Instead of requiring a minimum sale amount for customers using credit cards. Implement a cash discount price. Offer two pricing structures. Regular price, and a cash discount price. Be sure that customers are fully disclosed of the cash discount price.
How many times have you seen businesses with minimums?
