We've all seen the 'minimum credit card purchase $10' signs plastered in stores, but are merchants permitted to refuse credit card payment on a small purchase?
There's a small KwikMart underneath my work which services my twice-daily Diet Coke addiction. Yesterday, I was stuck behind a man who was arguing with the clerk about the EFTPOS minimum purchase rule. The conversation went something like this:
Aggressive customer: "Hi, I'd like to purchase this packet of chewing gum and pay on EFTPOS."
Underpaid clerk: "Sorry, it's a $10 minimum for EFTPOS"
Aggressive customer: "But I only have a few dollars in my account."
Underpaid clerk: "Sorry, those are the rules"
Aggressive customer: "I'm a regular customer - I buy cigarettes here every day and you're telling me you can't bend the rules this once?"
After that it degenerated into the underpaid clerk shrugging and apologising and the aggressive customer become more, well, aggressive. Unfortunately I was served by underpaid clerk #2 and exited stage left before the conclusion of the argument.
But it raises an interesting point: are merchants allowed to implement a minimum purchase amount?
Surprisingly, the answer is no, at least for credit cards. According the worldwide websites of Visa, MasterCard and American Express, the merchant agreements explicitly forbid them from setting a minimum credit card purchase amount.
Consumerist.com ran an interesting piece on the subject back in 2006 for U.S. cardholders.
Why do merchants break the rules? It turns out that merchant banking fees can erode the profit margin on small purchases to the point that the merchant actually loses money on the sale. As such, many implement this minimum credit card transaction threshold.
So what can a merchant (legally) do? While the agreements forbid merchants from refusing small transactions, it says nothing about offering a discount for cash. Consumerist suggests merchants raise the prices of their goods to cover the costs of their merchant fees and then offer a small discount to encourage customers to pay by cash.
