Credit Cards and Minimum Purchase Requirements
Tip It!We’ve talked in the past about how the major credit card issuers don’t allow merchants to require a minimum transaction amount in order to accept a credit card (e.g., here and here). Well, guess what? That appears to be a thing of the past.
As I previously reported, the recent financial reform legislation allows merchants to enforce minimum purchase requirements as long as they’re applied across the board.
According to The Consumerist, AmEx, Visa, and MasterCard have changed their policies to allow merchants to require a minimum, and Discover isn’t far behind.
What do you think? Is this a good idea? I suspect that the answer to this question depends on your situation. Small merchants are probably thrilled to have the flexibility, whereas consumers are more likely to be unimpressed.
Published on September 3rd, 2010 - 21 Comments
Filed under: Credit Cards
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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September 3rd, 2010 at 1:52 pm
I’m a little bummed by this, myself. I only ever got into one argument over this. Merchants should either accept credit cards or not, period.
Any idea about the other end: Are merchants now able to set maximum limits as well? Car dealerships are notorious for this…
September 3rd, 2010 at 1:59 pm
yeah, when I bought a car two years ago, instead of paying cash, I wanted to put it on the cc to get the rewards points (paying it off when the bill came due, of course). The dealer said I could only put $5K on the card
I wrote a check for the rest, but it would have been nice to get another free airline ticket 
oh, but I have no problem with the minimum. I hate it when the hubby puts $1.25 on the card at the grocery store! C’mon, how hard is it to grab a $5 and put it in your pocket before you leave the house?!?!
September 3rd, 2010 at 2:45 pm
Look at this from the merchant’s point of view.
For a small purchase, the fixed fee (for example, 30 cents) is going to be a huge percentage of the transaction, and would more than kill the profit on the transaction for the merchant.
For a large purchase, the percentage fee starts to get to be too much. 3% on a $30,000 car is $900. That too could be more than the dealer’s profit on the car.
September 3rd, 2010 at 3:23 pm
Steve: I understand the math in both cases, but the merchant agreed to those terms when he signed up for the account. MOST customers are going to fall outside of those extremes in MOST businesses.
September 3rd, 2010 at 4:26 pm
This is a tough one for me. I think I like it at the end because, while I may give up 1 or 2% cash back rewards when I don’t get a “cash discount” this may remove the “latte factor” from some people’s credit card debt. But I’m sure starbucks and big coffee houses will still gladly take a credit card for a $3 coffee. I’m going to have to circle back on this one before I decide though – I don’t know enough about it.
September 3rd, 2010 at 4:26 pm
A lot of merchants have had a minimum-purchase price anyway — against Visa/Mastcard rules.
These were just rules that were never enforced anyway — merchants should do what they think is in the best interest for their business. Customers who don’t agree should vote with their wallet by shopping somewhere else.
September 3rd, 2010 at 4:59 pm
I think merchants should have the option. But then they should not be surprised when a customer complains. The whole reason stores carry anything under $5 at all is out of the hope that you’ll throw more stuff in your cart just because you’re there. If I were a merchant, I’d do careful analysis to make sure I wasn’t about to bite my nose to spite my face.
September 3rd, 2010 at 5:01 pm
If you live in a college town, most of the stores around you already had “unofficial” minimums for CC purchases. I tried to inform one owner about the minimums and he gave me an ear full. I dont see much of a problem with it as long as it is clearly stated before purchasing.
September 3rd, 2010 at 5:18 pm
@MITBeta, you’re right that vendors agree to the terms set by the credit card companies, but that’s a simplistic view.
Nowadays, a business more or less has to be able to accept credit cards to stay competitive. Like Steve said, what may seem like a small fee can take a huge chunk out of a small business’s revenue, and a lot of transactions at places like convenience stores would be affected.
To me it’s almost a moral issue; why knowingly do something that will hurt an innocent business owner?
September 3rd, 2010 at 7:11 pm
Then they should build the price of the credit card transaction into the price of the goods. It’s really not up to me to act in the best interest of the merchant, it’s up to the merchant to act in the best interest of itself AND honor its business agreements.
September 3rd, 2010 at 9:43 pm
MITBeta, building the price of the credit card transaction into the price of the goods would mean you’re just paying extra to use your card. I don’t know about you, but I’d rather buy an extra item I’ll use instead of just giving the merchant the same amount for nothing.
September 4th, 2010 at 3:12 pm
People have been doing it for decades, and as far as I could tell–credit card companies were uninterested in enforcing their own rules.
So as these new regulations take effect, I doubt much will change.
September 5th, 2010 at 9:43 pm
There’s nothing wrong with a merchant requiring minima. Especially since it’s an inevitable byproduct of our betters in the federal government messing with a credit card system that was working fine without their intervention.
“Merchants should either accept credit cards or not, period.”
It’s not that simple. That’s like saying that restaurants should require you to order food, or not. “Yeah, our table of 12 is going to share this one salad. Oh, and can we get some more complimentary breadsticks?”
September 6th, 2010 at 11:38 am
I get that merchants need to stay in business and everything, but it’s incredibly annoying and frustrating when you have an item or two and you’re told AT the counter that you have to buy more to use a credit card.
I honestly feel that it cheapens the brand – making customers jump through hoops.
There’s also a practicality issue: customers shouldn’t have to remember what every store’s minimum amount is.
And I’d argue that merchants make more money to begin with by accepting credit/debit – impulse buys, etc.
September 6th, 2010 at 2:12 pm
A few years ago I was able to use my credit card at those automated USPS kiosks. A 39 cent stamp charged on my credit card. They did away with that after about a year as my mailing of first class mail came to an end.
Now the minimum purchase is one dollar, or three stamps.
September 7th, 2010 at 1:10 am
I have a personal, mental credit card minimum – it works really well to keep me on budget, because what on earth would I really need, that was less than $5 or $10, that I hadn’t planned ahead for enough to have cash on hand?
So I think the minimums are a good idea – but I wonder how many merchants will really enforce them, if they piss off customers.
September 8th, 2010 at 11:29 am
I hate the idea, but I can’t help but think it’s been going on for years, even before this new legislation supposedly allowing it. I’ve seen it many times. I also hate that gas stations charge less if you pay with cash. Even my utility company charges an extra fee to pay by credit card. I don’t think that should be allowed. Either you accept credit cards or not. If you put in a minimum, I will boycott your business. I’m very big on principle. Some people might think it silly, and it may have no impact on that business, but it makes me feel better.
The biggest frustration I see is no consistency in the minimums. One store may require a $10 purchase where another requires only $5.
September 8th, 2010 at 12:25 pm
@Carol It just reiterates the point that cash is king.
September 8th, 2010 at 12:32 pm
@Jeremy
I don’t like using cash. It’s not as safe.
September 10th, 2010 at 1:07 pm
@Carol I bet the credit card companies love you.
September 10th, 2010 at 1:12 pm
@Steve
Fine by me. I never carry a balance. Get cashback on my purchases. If the cards ever tried to charge me any kind of fee, I’d go back to cash. I use credit cards to my advantage.