Minimum transaction amounts for credit cards

[fgray30]

Hi all,

Sorry if this has been covered already!

I seldom carry cash these days and it's particularly inconvenient for me when a merchant (bakery, general store, etc) imposes a minimum transaction amount. They usually have a sign up that reads "$10 minimum for cards" or whatever.

This morning I went to a cafe and tried to purchase $9 worth of food on my card, only to be told of their $10 limit. I told them I'd be happy if they added their merchant processing fee to the sale, and yet they still refused! These stupid businesses are refusing $9 worth of business (and whatever margins they would make on a takeaway coffee and muffin would be considerable and more than cover the transaction processing fee).

Does this seem ridiculous business practice to anyone else? If they are really be hurt by this cost of doing business, just raise the cost of a coffee by the same amount - no one will even notice.

The Mastercard 'Merchant Rules' on their website state that merchants cannot impose these limits.

Apparently the fines are quite severe for imposing minimum limits for a 'properly presented Mastercard' - $US 25,000 for the first offence and then up from there! Does anyone know if these rules apply to Australian merchants? I'm not out to try and put anyone out of business, I just want the convenience of being able to actually buy breakfast once in a while, and pay with my card so that I don't end up with a pocket full of coins.

Cheers!

 

[notzac]

To the best of my knowledge, there are no rules permitting or denying minimum tx limits in Australia.

 

[fgray30]

Thanks notzac,

If you go to mastercard.com/au, then do to the 'Merchants' tab, there will be a link to the .PDF file for the merchant rules, which clearly state no limits (either minimum or maximum) are to be enforced.

I'd provide a link but I don't have 10 posts on here yet.

 

[Dave Noble]

I'd provide a link but I don't have 10 posts on here yet.

Um, you do

Posts: 11

Dave

 

[fgray30]

Well in that case!

Merchant Rules | MasterCard® Australia

 

[Dave Noble]

Hi all,

Sorry if this has been covered already!

I seldom carry cash these days and it's particularly inconvenient for me when a merchant (bakery, general store, etc) imposes a minimum transaction amount. They usually have a sign up that reads "$10 minimum for cards" or whatever.


Does this seem ridiculous business practice to anyone else? If they are really be hurt by this cost of doing business, just raise the cost of a coffee by the same amount - no one will even notice.

It seems more ridiculous to me to not carry any cash to cover small purchases

Would they have accepted your card if you had been prepared to pay $10 for the $9 purchase?

As far as the referred to regulations go, I am not sure whether that will be valid. One of the other prohibited practices ( 5.9.2 - not permitting surcharging ) is not a valid prohibition in Australia. I would check the legality of the prohibition 5.9.3 before complaining

Dave

 

[wxxnxs]

Hi all,

Sorry if this has been covered already!

I seldom carry cash these days and it's particularly inconvenient for me when a merchant (bakery, general store, etc) imposes a minimum transaction amount. They usually have a sign up that reads "$10 minimum for cards" or whatever.

This morning I went to a cafe and tried to purchase $9 worth of food on my card, only to be told of their $10 limit. I told them I'd be happy if they added their merchant processing fee to the sale, and yet they still refused! These stupid businesses are refusing $9 worth of business (and whatever margins they would make on a takeaway coffee and muffin would be considerable and more than cover the transaction processing fee).

Does this seem ridiculous business practice to anyone else? If they are really be hurt by this cost of doing business, just raise the cost of a coffee by the same amount - no one will even notice.

The Mastercard 'Merchant Rules' on their website state that merchants cannot impose these limits.

Apparently the fines are quite severe for imposing minimum limits for a 'properly presented Mastercard' - $US 25,000 for the first offence and then up from there! Does anyone know if these rules apply to Australian merchants? I'm not out to try and put anyone out of business, I just want the convenience of being able to actually buy breakfast once in a while, and pay with my card so that I don't end up with a pocket full of coins.

Cheers!

I think that's why the survey which did by RBA shows the CASH is still the major way to pay for the transaction. If I'm in that situation, I will ask the merchant to charge $10 straightway, because I don't think the staff even knows how much does the processing fee cost?

 

[notzac]

Well in that case!

Merchant Rules | MasterCard® Australia

Interesting, thanks for posting that link!

Reading the rules, I'm intrigued by point 5.9.2:

Charges to Cardholders
A Merchant must not directly or indirectly require any Cardholder to pay a
surcharge or any part of any Merchant discount or any contemporaneous
finance charge in connection with a Transaction. A Merchant may provide a
discount to its customers for cash payments. A Merchant is permitted to
charge a fee (such as a bona fide commission, postage, expedited service or
convenience fees, and the like) if the fee is imposed on all like transactions
regardless of the form of payment used, or as the Corporation has expressly
permitted in writing.

This seems to be in conflict with what large number of merchants do, and certainly in conflict with the RBA guidelines which permitted merchants to impose a CC surcharge from 2003 onwards. Is this another example of the law overruling a business agreement?

 

[fortymilliondaggers]

Is that a consumer protection provision or a condition of the contract between merchant and mastercard? If contractual, it cannot be enforced by third parties (consumers).

 

[fgray30]

It seems more ridiculous to me to not carry any cash to cover small purchases

Would they have accepted your card if you had been prepared to pay $10 for the $9 purchase?

As far as the referred to regulations go, I am not sure whether that will be valid. One of the other prohibited practices ( 5.9.2 - not permitting surcharging ) is not a valid prohibition in Australia. I would check the legality of the prohibition 5.9.3 before complaining

Dave

I asked them to make my transaction $10 but they refused. They said I would have to purchase another item to make it over the $10 limit. I sometimes do carry small amounts of cash, but when I don't, I don't want to be out of options without an ATM in sight. Plus it reduces the amount of small change I need to carry around every day.

I would rather these small businesses provide the option of adding a surcharge of 25c or whatever (which I would happily pay) rather than refusing service all together. I get my goods, and the merchant does a bit of extra business that day. Win-win!

My gripe isn't necessarily about the legalities of these transactions, I just want some common sense! It seems these small businesses are shooting themselves in the foot by turning away the extra business.

 

[fortymilliondaggers]

I asked them to make my transaction $10 but they refused. They said I would have to purchase another item to make it over the $10 limit.

That was stupid. Anything worth a dollar in the shop?

 

[fgray30]

Is that a consumer protection provision or a condition of the contract between merchant and mastercard? If contractual, it cannot be enforced by third parties (consumers).

Good question. The consumer probably couldn't enforce it directly, although Mastercard provides 'merchant violations' as an option in the drop down menu when you go to their contact page:

Contact Us | MasterCard® Australia

 

[fgray30]

That was stupid. Anything worth a dollar in the shop?

No, cheapest thing was another cup of coffee! $4.50.

 

[docjames]

It's pretty idiotic not to accept $10 for a $9 purchase.

 

[zzyss]

It's pretty idiotic not to accept $10 for a $9 purchase.

To us, yes that seems unnecessarily idiotic. But think of the poor wage slave serving you who would have to suffer the wrath of accounting, who wants to know why, in their monthly rec, they're $1 over.

 

[simongr]

I partially think the minimum transaction amount is due to time of processing as much as cost. I know if I was buying my morning coffee and I got stuck behind someone paying by card I might walk off.

 

[SimonM]

And it's not just small businesses. Australia Post won't accept credit cards or EFTPOS for transactions under $10.

Tricky, when even a book of stamps is $5.50.

 

[Mal]

I partially think the minimum transaction amount is due to time of processing as much as cost.

Which is why Amex, Visa and Mastercard are all busy trying to get their small/micro payments systems running.

They're the ones where you wave your card over a reader for transactions less than a certain amount (eg $25) and no paperwork or pin is required.

There are some trials happening in Australia at the moment with this, and the systems are in use in the U.S and also Europe I believe.

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