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Author Topic: "$5 minimum for credit card purchases."  (Read 416 times)
CHICAGOTOM
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« on: February 08, 2009, 11:51:03 AM »

Myth No. 6: Retailers can set a minimum amount you can charge on a credit card when you buy something from them.

The Logic: In a small store or restaurant, it's not uncommon to find a sign that says, "$5 minimum for credit card purchases." If this wasn't allowed by the credit card companies, surely they'd crack down on it.

The Reality: Retailers who set minimum charges are breaking their agreements with the card companies Roll Eyes. Because retailers pay interchange fees -- which vary, but average about 2 percent of the sale -- plus possible transaction fees on each credit card purchase, it's easy to see why a store owner would want to discourage lots of small credit card sales. But when they do so, they risk losing their ability to accept cards. "You're allowed to charge any amount on your card, even a penny," says Zeichner. "The problem is that the retailer wants you to charge enough to make it worth his while."

If you need to use a card for a small transaction that's against store policy, you can object, although you may be invited to take your business elsewhere. The other thing to do is contact the credit card company. "We want to know about retailers who do this," says Matt Towson, a spokesman for Discover Financial Services. "It violates our contract with them." Shocked
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dondene1
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« Reply #1 on: February 09, 2009, 01:12:26 PM »

i set $5.00 minimum CC charge.
9 of 10 times, customers pay with cash, or rent 1 more movie, or buy popcorn or candies. And they understand it. i only had 1 customer walked out on me saying 'taking my business to somewhere else.'
Overall, i see it helps encouraging customers buy or rent more to go over $5.00.
« Last Edit: February 09, 2009, 01:17:44 PM by dondene1 » Report to moderator   Logged
CHICAGOTOM
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« Reply #2 on: February 09, 2009, 02:36:04 PM »

True but you are violating the contract YOU signed with the credit card company Roll Eyes
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genx-mike
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« Reply #3 on: February 09, 2009, 02:53:27 PM »

Exactly. You could lose the ability to accept credit and debit cards for your store.
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direct007
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« Reply #4 on: February 09, 2009, 10:39:28 PM »

There are work arounds for this issue.  A retailer can charge a "convenience fee" for certain transactions to make it more cost effective.  You just need to charge it across the board.  You can charge a $2 convenience fee for all transactions less than $10.
As long as you are charging the fee to cash customers as well as credit card customers, there is no problem.  You just can't discriminate against a particular payment type.

In reality though, just build the cost of taking credit cards into the fees you charge.  I'd rather take a 3% hit on a $5 sale than losing it all together.  It's really only an issue on low markup items, but a movie rental isn't something you are making .20 cents on.
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CHICAGOTOM
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« Reply #5 on: February 09, 2009, 10:45:53 PM »

Did you use to work for TicketMaster Huh
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