Consumer alert: Minimum Purchase Hall of Shame

[marnen]

It has just come to my attention that credit card companies frown on merchants imposing those pesky minimum credit-card purchase requirements. In fact, they don't allow merchants to do this at all.

So what am I doing about it? Well, first of all, I am reporting merchants who do this (see here for how to do that), but there's another part too. I have created the Minimum Purchase Hall of Shame for people to share information about these merchants and whom they have been reported to. It's just a LJ community at the moment, but I have plans for a nice searchable database of these folks. So...get out there and start reporting merchants who break the rules!

Comments

[jannyblue.livejournal.com]

Just a note:

American Express allows minimum purchase requirements if (and only if) the store takes ONLY American Express cards.

[marnen.livejournal.com]

I suppose so, but that's kind of putting it backwards. From http://www.gofso.com/Premium/LE/06_le_ic/fg/fg-merchants.html :

Visa's and MasterCard's regulations prohibit minimum charge amounts. American Express's regulations do not explicitly prohibit minimum charges, but its policy is to discourage any merchant practices that create a "barrier to acceptance." Amex does prohibit "discrimination" against the Amex card, however, so if a merchant has no minimum charge for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum charge.

However, their website implies that if there's not an actual prohibition the way there is with Visa and MC, there's at least a strong discouragement of the practice.

[jannyblue.livejournal.com]

When I worked for Panix, we had a "minimum" charge amount, but it was more of a "We'd really rather not charge anything under $10, but if you ask us to, we will".

It's not like we weren't going to charge them for their internet service next month, too...

[featheredfrog.livejournal.com]

Ever wondered WHY some merchants impose these minima? It's certainly NOT to be "pesky" to their paying customers. No sane merchant would do that. Merchants cut close margins anyway. Sometimes, on small sales, the fees on the cards are more than any margin at all. The solution other than a purchase minimum is to either

1. Impose a fee on small (or all) credit card sales

   Not permitted by the card companies, either...

2. Raise prices across the board

   This means cash-customers are subsidising your cc convenience, and let's not forget "Wally's has it cheaper..."

3. Offer a discount for Cash

   "Discriminating" against the CC user, and, incidentally, prohibited by "the rules", too

4. Eliminate Credit Cards entirely

   You KNOW what that would do for sales

So what's a merchant giving you good prices to do? IMO the merchant is offering you an additional service by accepting your CC -- you SHOULD be paying for it.

[featheredfrog.livejournal.com]

It occurs to me that 4 is the correct solution, coupled with installing an ATM that permits withdrawals, AND cash-advances in the merchant's store. This has it's downside, as well - The Mob isn't only into Jukeboxes these days...

[jannyblue.livejournal.com]

I think more places should take checks.

[cellio]

I use my credit card when I can, to reduce the amount of cash I have to carry and to get the automatic tracking (makes it easier to figure out what I spent money on at the end of the month if it wasn't all cash). But I want my favorite stores to both stay in business and not raise prices across the board, so when I doubt I've taken to asking "would using a credit card mean a loss for you?". Would a store requesting (but not requiring) a certain minimum violate the credit-card rules? I think the well-placed sign saying something like "credit-card charges under $10 cost us money" would do wonders, because a lot of people either don't know or don't think about the fees.

[marnen.livejournal.com]

I have no problem with that idea. There's a big difference between saying "don't charge under $10 if you can help it, so as to keep prices down for everyone" and "minimum charge $10".

[marnen.livejournal.com]

Besides, if the fees are going to make or break a business, then I think that business should not accept credit cards -- it would be too much risk. I've run across cash-only businesses in the oddest places, and they seem to do fine.

[marnen.livejournal.com]

I am well aware of these issues. And while in one way I sympathize with the merchants, in another way, I don't care at all.

See, the fact is that these merchants entered agreements with the credit card companies that prohibit them from imposing minimum purchases. Since they entered these agreements voluntarily, they should play by the rules of the agreements. If they thought the rules were intolerable, they should not have accepted the agreements. Period. No exception.

If small CC transactions are that much of a thorn in the merchants' sides, then they should encourage the CC companies to change their rules, not simply break those rules. Besides, if a merchant breaks a signed agreement with a business service provider such as a CC company, why should I expect that same merchant to deal honestly with me as a customer, particularly since I don't even have a signed agreement?

Finally: there is no such thing as a free lunch. I am aware that strict enforcement of these rules may cause prices to rise a few cents across the board. That's all right with me, since I doubt that the increase would amount to more than pennies per transaction -- and more importantly, the merchants wouldn't be in breach of contract.