Chances are greater than ever these days that when you pay for a purchase —whether it’s groceries, dry cleaning, or a restaurant meal — you skip the cash and pull out the plastic. Credit card and debit card transactions are skyrocketing.
Maybe that’s why I get so many questions dealing with them. It’s clear from your questions that a lot of smaller merchants don’t know the rules for accepting cards from Visa and MasterCard, or if they do, they don’t follow them. For tips on how to report problems, see the box below.
There’s a small video store near my house. They accept credit cards, but say you need to spend over $15 to use your card. Can they do this?
—Talia G., Norfolk, Va.
No. Visa and MasterCard say merchants who accept their credit or debit cards cannot set a minimum purchase amount. The credit card companies have this rule because they want you to use their cards like cash — for any purchase of any amount at any time.
But lots of small merchants break the no-minimum-purchase rule. I frequently see signs at coffee shops and convenience stores that say a minimum purchase is required. Is this an honest mistake, or do they figure most customers don’t know the rule? I can't say, but the fact is that with millions of merchants accepting these cards enforcement is minimal.
Cardholders who have a problem with a merchant are supposed to contact the bank or company that issued their card. I’ve heard from MSNBC readers who’ve done that and are very frustrated by the response. Some say the bank’s customer service representative told them there was nothing they could do about the rule violation. Others were given erroneous information about the rules. For example, Justin in Hellam, Pa. was told a merchant could require a charge of at least $10. That is clearly incorrect.
As a merchant, I can understand wanting to put a minimum on a credit or debit transaction. Typically, the merchant can pay a percentage, say 1.5 to 4 percent, plus a transaction fee. 20 cents is typical. I've been charged as high as 25 cents per transaction. Maybe you could do all of us merchants a big favor and look into the fee structures of Visa and MasterCard and then educate the population on not using their debit cards for transactions under $5. The only ones getting rich here are the credit card companies, making money on both ends of the transaction!
— Rachel P., Bothell, Wa.
I understand your frustration. That’s why I often pay cash for small purchases at retailers I visit frequently. Here’s how the credit card companies respond:
“Merchants know the rules going in, and overall they benefit from accepting the card," said Tristan Jordan, a spokesman for MasterCard.
Rhonda Bentz, vice president of Visa USA, says a merchant can try to “steer the cardholder to another form of payment.” For instance, they can offer a cash discount. But, she says, they cannot refuse a transaction because it’s too small.
I wanted to buy a used minivan from a dealership using my credit card. My credit limit far surpassed the $17,000 cost and I wanted to get the frequent flyer miles. The dealership said I could not make a charge that big. Is this correct?
—Kevin K., Grapevine, Tex.
Both Visa and MasterCard tell me a merchant cannot set a limit on the size of the purchase. So, if you had a valid card and enough available credit, the car dealership should have accepted your card for payment.
For the record, here is the official policy of Visa: “Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. Imposing minimum or maximum purchase amounts is a violation.”
And here is MasterCard's: “A merchant must not require, or post signs indicating that it requires, a minimum or maximum transaction amount to accept a valid MasterCard card.”
Can merchants ask for ID when you make a credit/debit card purchase?
—Lorna M., New York, N.Y.
Visa and MasterCard have similar rules on this. In most cases and in most places, a merchant cannot ask for identification to process your transaction. If the clerk believes the signature on the sales slip does not match the signature on the back of the card, they can call the card verification center and may be instructed to ask for identification.
Merchants are required to ask for picture ID if the signature line is blank. You will be asked to sign the card on the spot. Visa and MasterCard rules say if you refuse to sign, that card cannot be accepted.
Instead of signing their card, a lot of people write “See ID,” or “Ask for ID” in the signature line. They think this will reduce their risk for fraud. The fact is this is not a valid substitute for a signature. If the card is not signed, it cannot be used.
Procedures can vary by state, however. In Washington state, where I live, the law allows merchants to ask for picture ID. Lawmakers in our state thought this would help crack down on credit card fraud.
There are many nail salons/spas in my area that will not allow the customer to put a tip on a debit or credit card transaction. The tip must be paid in cash. Can they do this?
—Linda H., Stafford, Va.
Actually, they can. That’s because the transaction with the merchant is limited to the cost of the service provided. The tip is between you and the employee.
Why would they want to do this? It’s probably a way to cut expenses, since the merchant pays a transaction fee — a percentage of the total bill — to the credit card company. By keeping the tip off the bill, that transaction fee is smaller.
Next week: Can a merchant charge you a fee to pay with your credit or debit card?