Credit Card Minimums

I heard on the news this morning when the financial reform bill was passed the agreement between merchants and Cc companies that had been in place where a merchant could not charge a minimum for a Cc purchase is now gone.
It has always irritated me when a customer comes in with an American Exp and wants to charge a $4.00 cigar and how much the processing fee is.

“The law has been passed that Visa and Mastercard can no longer enforce their previous rules which did not allow the merchants to have a minimum purchase.

In addition, they are no longer able to tell merchants they cannot pass the costs on to the consumer.”

http://www.cardratings.com/creditcardblog/2010/06/financial-reform-bill-offerings.html

Awesome news!!

I heard this as well - they can mandate a $10 minimum purchase, from what I heard. As long as my debit card can do smaller purchases, I am cool.

is the processing fee for merchants a straight percentage or a fixed fee?

and how does it break down between amex, visa/mc, etc? always been curious about this. i’ve noticed a lot of merchants lately either not taking amex or taking amex exclusively.

Am Exp is a fair amount higher than Visa or M/C. There are usually different types of fees on different types of cards. If it’s a reward/airline Cc the fee is usually more . Debit cards (for obvious reasons) are the least for fees. The % usually depends of the Cc.
Many retailers will give discounts for cash as an incentive for not having to pay the Cc processing fee.
We started taking Am Exp because most of our corporate accounts use it but it isn’t cheap.

You have some cheap ass customers. neener

We actually have cigars called Cheap Bastards, just for them [wow.gif]

Even if the local retailers would take AmEx, I would not use it as I know their fees are much higher! flirtysmile

Does anyone actually have a minimum that you have tried to enforce?

LOTS of places, not just wine stores, have them in NYC. Corner bodegas, sandwich/pizza shops, etc.

I am definitely considering doing it now, especially for AMEX, but I would definitely set it at $10.00.

There is one local bank that CHARGES folks to do debit instead of credit, it could get a little dicey with those folks. I’ll keep everyone posted if I start it.

Brent,

We’ve never done it before since it was against Cc policy but since it is allowed now, we are talking about implementing a minimum just because of what I mentioned with guys coming in and buying inexpensive cigars and using Am Exp. I think it has to be for all Cc so it isn’t seen as discriminatory.

I know that about 20 years ago in NYC (so I have no idea where or when else this might apply) Amex charged more then Visa or Mastercard unless the merchant only accepted Amex, in that case they charged less.

A lot of merchants that have stopped taking AMEX had problems with AMEX continually protecting their customers in dispute situations. A few that I have talked to (mostly the wine business) were particularly upset because they viewed themselves as customers of AMEX (or just as important customers) and hated not getting the same support.

In other industries (one that comes to mind is real estate/construction) AMEX has terminated their relationships with customers with little or no notice, and even less explanation. As a way to get back at AMEX some of these vendors have stopped accepting the card.

Most independent retailers in my area have set $15 as a min for credit card sales. This is kind of funny in that now the fast foods are taking cc sales at any level. One can only beleive that the major chains can negotiate a better deal. Otherwise, how could anyone justify a cc charge on a $3.50 breakfast menu charge?

We accept cc charges on wholesale business charges in excess of $100. We dodge low scale government business that wants to pay everything these days on cc! We do not accept cc charges on labor charges below $200. We get lots of people that will tip our people up to get to the $200 level just to use the cc.

Some people use the cc’s to manage cash flow, others use it for the points only. We’re not Walmart! I hate having my people standing there as three straight different credits cards come back “DENIED”. For our people in the field doing commerical work it becomes a particular problem as the guy doing the charges hasn’t a clue of what is going on with the corporate card issued his customer.

Carrie,

Do you have a PIN pad and POS software that can process debit?

Charges are much less for that. If I decide to set a limit, it will be for ALL CC’s, but if people are using their Visa/MC ‘check card’ that is linked to their checking account, we can choose ‘debit’ for the authorization, they type in their PIN, and it goes right through, with a lower processing hit vs. running it as a CC. That was why I mentioned that for the folks who have the local bank that charges for Debit, it could be an issue.

On the whole, however, I can usually count on one hand the number of CC transactions under $10 I have in one week. It’s higher in the city, however, but still probably only 1-3% of our total weekly CC transactions. So it’s still reasonable to deal with this on a case by case basis.

Yaacov,
Amex has a higher processing fee still than Visa or Amex, and in the 21st century a standard retail operation that serves the entire GP could not get away with Amex only. COSTCO is a great example, as they do that. Amex only, but you can use your visa/mc ‘debit’ card if you use your PIN.

Brent,
We don’t have the Hi Tech 21st century keypad for customers to punch in their PINS, our machine is an antique but we can key it for a debit or Cc. Having all our service through our bank we get lower rates on the processing fees but they are still there and I’m sure if we upgraded it would be in our favor but then we would have the monthly fee on the machine . It would probably be a wash.

I’m confused. If the cc company charges some minimum flat fee your argument makes sense. If it’s a % then who cares? Is it usually A or B? I realize it is not always either A or B. But usually…Is it usually A? Or is it usually B?

  1. It is usually A+B, and the fixed fee can be a huge percentage when the dollar amount is small.
  2. The ability for the merchant to bargain for a better deal with the company that clears the slips is a function of many thing, butg one of them is average transaction amount. If the average transaction amount is hiugher, the merchant can make a better deal. So those $4 cigar purchases can ruin the average.
  3. I have no horse in this race. If you can’t carry $4 in you pocket to buy a cigar and have to use plastic, then don’t smoke the cigar.

this is the anti-trend. eventually, no credit cards just mobile devices with payment ability. being able to quickly and easily conduct micro-transactions will result in more transactions (i’m sure you’ve all noticed that various merchants have transaction amounts by which you don’t even need to sign the receipt anymore – whole foods is up to $50! – which only makes it easier). i use my cc for everything possible. i think the ONLY thing i don’t use it for is rent and con-ed (neither take cards). i abhor cash and change even more so.

i assume that merchants have done the requisite math to be able to afford any normal credit card and then charge for their goods accordingly. i don’t really have a problem with places that offer discounts for cash/debit, but i also don’t seem to shop at any of these places – seems cheesy i think.

I’m sure the merchants here will have more specific details, but my understanding is that the flat rate they pay varies according to their average transaction amount. Carrie, is that correct? So if you have a lot of people charging $4 cigars instead of $1000 cases of wine, the % you pay rises?

Melissa,
There is a flat percentage processing fee for the different types of Cc. Most Cc companies tack on a monthly service fee if you receive paper statements. All Cc’s charge an additional fee on top of the base % if it is any type of manuel entry transaction, if the customer is present the fee is a little less but for internet or phone orders when the customer is not present it’s a skosh higher. The international Cc are more, then add if they are Rewards, Corporate Cards and on & on. Some even have a % plus a per transactioin fee . They find a way to ding us every chance they get.
I was reading my recent statement, they have different % and transaction fees if your’e a supermarket, petroleum merchant, quick service restaurant and bundled retailers.
They have also started charging a penalty fee is they deem an authorization has been misused. HUH !!