|by Jason Steele|
When writing about credit card merchant fees, I have frequently used the example of my favorite bagel store here in Denver. They have a very simple approach to business. In fact, they are just called “The Bagel Store”. For years, they simply did not accept credit cards. If you wanted to indulge in their baked goods, you needed cash or a check. Although I prefer to use my credit card, I thought, “good for them”. If a small business doesn’t like credit card interchange fees, they always have the choice not to accept credit cards. Generally, purchases are small and it is unlikely that their customers really needed to finance a couple dozen bagels.The owners must have decided that the cost of accepting credit cards was greater than the costs and risks of handling cash. Tellingly, their surveillance cameras were trained on their cash register, not on their exit or their customers.
A New Development
Last year, their ownership changed. Thankfully, very little else did and I still visit on Sunday mornings for some great bagels. What I did notice was that they are now accepting credit cards. On my last visit, I asked if they would now accept my credit card. The answer I got was surprising. They cashier said yes, but they requested that I only use my card for purchases over ten dollars. Since my purchase did meet this request, they accepted my card with no further discussion. What is interesting is that credit card networks, like Visa, Mastercard, and American Express prohibit merchants from requiring a minimum purchase.
By merely requesting a minimum purchase, they complied with their merchant agreement while attempting to contain their costs. Since this is a small business that caters to the community, it is difficult for me to imagine that this policy will cause a huge commotion. Regular customers like myself are relieved not to have to scrounge around for cash before a Sunday morning bagel run. I also appreciate their polite request a lot more than an obnoxious sign demanding a minimum purchases. Credit card experts like myself know that such signs violate their merchant agreements.
What To Do When Faced With A Mandatory Minimum Purchase
There are a few ways to handle the situation when you come across a minimum purchase requirement. You can be totally non-confrontational. This means either complying with the policy or taking your business elsewhere. You probably won’t geet very far informing the merchant that they are violating their agreement with their credit card processor. Either the person you speak to will be an employee who has no control over the policy, or it will be the person who put up the sign in the first place. Many small businesses hate credit card companies almost as much as they hate the government. Unless you want to enter into a long conversation about the fairness of credit card merchant fees, it is probably best just to leave it alone.
That does not mean that you should give up. The merchant agreements exist for you, the cardholder. When you accepted the card, you did so because there are merchants out there who are part of a network and agree to certain rules. Even though you are not technically a party to the merchant agreement, the agreement exists for your benefit. Whether or not you choose to complete your transaction, you can report this merchant to their processor. Mastercard has a form on their website for merchant violations here. Visa does not appear to have an online form, but you can call them at 800-VISA-911.
Don’t let a merchant take advantage of you by requiring a minimum purchase or even adding a fee for you to use your card. By reporting these rouge merchants, you are helping to cut down on this kind of consumer-unfriendly behavior. As The Bagel Store shows, accepting credit cards are a choice that a business makes. When they make such a choice, they enter into an agreement. You are required to comply with your agreements, shouldn’t they?