Credit Card Minimum Purchase


Most local Davis merchants generally accept credit cards, or Visa/MasterCard network debit cards for payment. Some of these merchants have set various conditions on transactions involving these cards, which is fairly common but actually illegal and/or in violation of credit card company rules. The two most common ones are:

2013 update (most of the discussion on this page is now obsolete): Due to a recent lawsuit in Summer of 2012 between merchants and Visa and Mastercard, charging a fee is now legal as of January 27, 2013. Visa, Mastercard, etc. have agreed to allow merchants to charge customers fees for using a credit card. The fee will be limited to the amount of money that the merchant pays to the credit card company. Retailers who add the surcharge most post a fee disclosure to the consumer at the store point of entry(or websites), point of sale, and on the receipt.

Charging a higher price for a credit card purchase vs. cash will also be allowed. Giving a discount price for using cash is currently allowed in all states including California and was allowed even before this lawsuit.

Though American Express and Discover were not part of the lawsuit, neither of these companies have policies prohibiting merchants from charging extra to credit card users. Instead, their merchant agreements state that a retailer can not charge extra to use these cards if they don't charge for using competitors' cards.

So now that Visa and MasterCard have opened the floodgates to credit card surcharges, merchants are free to tack on the surcharge for Amex and Discover purchases.

The cost of credit card use is already factored into the final price of the products and services that we buy.

This credit card surcharge essentially results in a double-charge for those opting to use credit credit cards. If a merchant charges a credit card surcharge it is now purely the greed of the merchant trying to nickel and dime their customers. The customer is the reason why a business stays in business. When you treat a customer as something to be exploited, it shows that all you care about it money and there is no genuine customer service.

Charging fees are occasionally confused with an authorization hold, which is temporary. They show up, especially on your internet statement, but if you look carefully, you'll notice that they don't actually apply against your available balance. They also disappear about two days or so later (sometimes a few days). They are how restaurants (and other service places) can run your card and then add a tip later without having to ask for your card again. It's a standard credit card thing (or debit card used as a credit card). This is standard and it has nothing to do with a scam or anything underhanded.

Charging a Fee

Surcharges are prohibited in the state of California (but not in 40 other states). Existing law provides that no retailer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by other means. The retailer may, however, offer discounts for the purpose of encouraging payment by cash.

[WWW]Civil Code Sec. 1748.1:
(a)No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means. A retailer may, however, offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.

(b) Any retailer who willfully violates this section by imposing a surcharge on a cardholder who elects to use a credit card and who fails to pay that amount to the cardholder within 30 days of a written demand by the cardholder to the retailer by certified mail, shall be liable to the cardholder for three times the amount at which actual damages are assessed. The cardholder shall also be entitled to recover reasonable attorney's fees and costs incurred in the action.

Now that merchants will be allowed to charge fees, politicians and lawmakers may also seek to change state laws to allow credit card fees.

The way that businesses can defend themselves if they are ever questioned by credit card companies is very straight forward. Businesses can claim that the prices posted are prices with a cash discount. Cash discounts are perfectly legal.

Most businesses are up front and post actual prices. Instead of saying that they charge a 50 cent fee, a business should simply raise all of their prices by 50 cents. 50 cents could be the difference between losing a customer for life. However, if 50 cents is going to break a person maybe they should consider not spending money on food and dealing with their money issues first.

Note: You can report illegal surcharges to Visa [WWW]here.

Minimum Purchase Limit

Tons of places charge you "processing charges" or set minimum purchase limits on credit card purchases. With the recent passage of the Dodd-Frank Act, minimum purchase limits are now allowed. This is all thanks to the members of Congress who pushed for this amendment that supposedly was created to benefit consumers.

Credit card company policies (as of September 1, 2010):

Typically, the merchants who do this are smaller, as the charges from the credit card companies impact them more than they impact a larger-volume business. However, since some potential customers may wish to decide whether to patronize a business based on their minimum purchase limits for credit cards — or need to know to bring enough cash with them for small purchases — all known minimums as of 9/1/2010 are listed.


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The following thread was [WWW]moved from a page in response to a cafe [WWW]now accepting CC's but with a fee.

The following thread was moved from a different page in response to [WWW]this comment about fees 2010-03-17 01:15:12   Merchants have to pay quite a few fees on every credit card transaction. You don't see this, because the fees are built into the prices you pay. (In fact, you pay higher prices if you pay cash, because you are subsidizing all of the "rewards" that credit card companies give to card holders." Merchants also can't charge more if you use a credit card. And they can't avoid taking them because most people insist on using one. This may have been what she was referring to. Restaurants like that are a low margin business, and using that card might have eliminated a significant share of their profits. Not their fault or yours, but it might be why they got upset. —IDoNotExist

2010-03-18 11:21:29   I gladly support small businesses who have a surcharge on credit cards. A few weeks ago, I saw a guy trying to buy a .75 can of soda with a credit card, and the clerk just gave it to him for free because he said he "gets charged almost that much just to swipe it." Obviously, this means that the processing fees are ridiculous. Stupid rules are made to be broken. But out of respect for the places that don't charge me for using CC, I try to avoid using plastic on purchases less than ten dollars even though I hate carrying around change.

It's well into the 2000's; why haven't we switched over to a totally account-based monetary system as in the cyberpunk novels of yore? I feel like some kind of ancient Roman thug when I feel the dead weight of coinage jangling in my pockets. —ScottMeehleib

2010-03-19 11:58:42   The main argument here seems to be that credit card companies are overpaid for their services. If that is true, why would merchants continue to accept credit cards? They certainly would not if they lost money with each purchase so this must mean that currently the merchant and the credit card companies think that they are at some equilibrium point where they both profit a significant amount by working with each other. Of course, credit card companies might want to move that equilibrium point over by providing incentives for using a card but the thing is, this is all the work of individuals who benefit from the services provided by another and as long as no one is being coerced I do not see a problem with it. Because of this, I believe that processing fees are most likely not ridiculous and I agree that surcharges are quite fair as well (law was probably pushed by credit card companies). Of course, I also do not think that the government should get involved and tell individuals what their contracts can or cannot have (banning the banning of surcharges and such). If people think the contracts are fair and they are willing to sign, what is the problem? That the credit card company might earn a little more than the merchant even if the merchant receives a net benefit as well? —hankim

2010-05-28 15:35:27   If these companies that set minimums are really doing something so wrong, the credit card companies would actually go after them. The fact is that the credit card companies don't go after them. The credit card companies actually expect retailers to set minimums and break their contracts. The truth of the matter is that credit card companies are not going to sue a small business or cancel their contract over this. Canceling their contract would make them lose money. Suing the local mom and pop shop would hurt their PR and would also be very expensive. A google search of credit card companies suing vendors only turned up cases of fraud and security breaches. —~~ —MattHh

2010-06-01 17:35:22   Congress is preparing to pass new legislation that would allow merchants to set minimum purchase amounts. Also included in this bill are rules to lower the interchange fee charged to merchants. What does this mean for customers? Using credit cards could cost more and it will mean less convenience for those who want to use credit cards. Who wins? Merchants such as stores and restaurants will make more profit. Who loses? Banks and credit card companies will lose out on profit. What does this mean to consumers? Credit card rewards programs will be impacted. You will see fewer rewards, less cash back, and credit card companies may have to charge annual fees for credit cards.

Is this legislation supposed to help average consumers? No. It aims to increase profits for merchants. Will this benefit consumers? No. In Australia, when interchange fees were lowered, customers did not see lower prices. Merchants simply pocketed the profit and kept prices just as they were. —MaxLucas

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