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Restaurants that require minimum for debit/credit card payments

Does anyone know if it is legal for businesses in California to demand a minimum purchase before they will accept your debit or credit card?

Don't want to shut down a good Chow source just keep them honest.

LC

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  1. All businesses can put minimums on charge cards, It is a way of limiting high CC fees on nuisance charges. Businesses can offer different prices for cash sales vs.

    22 Replies
    1. re: ospreycove

      According to creditcards.com "Purchase amounts: Merchants cannot impose minimum or maximum purchase amounts for credit card transactions." It is considered a minor transgression.
      http://www.creditcards.com/credit-car...

      1. re: wolfe

        It may violate their contract, not state or Fed law.

        1. re: ospreycove

          That's it. I'm not sure that I want the government to legislate to that level. The state credit card police tagging a store for minimum purchase requirements.

          1. re: ospreycove

            Yes, I think there have been a few posts on CH about this in the past.

            Personally, if the minimum credit card charge is reasonable (< $20), I don't see what the big deal is. Restaurants generally operate on very slim margins. I wouldn't feel right about putting a $5 lunch special on a credit card. I know there are posters who feel that "rules are rules." I just don't see it that way.

            1. re: Miss Needle

              Not that it's relevant to California law, but in NYC, minimums have been illegal for a while. (I think by local rather than state law but I don't remember at this point.) For a while they were enforcing it strictly at all levels, but seem to have backed off from smaller merchants. These days, I rarely see a customer argue over what are generally reasonable minimums, but I've also never seen a merchant refuse a charge when "reminded" of the law.

              1. re: Miss Needle

                I agree with Miss Needle, especially in this economy and it's a local restaurant.

          2. re: ospreycove

            Is a cup of coffee a nuisance charge? I see people at Starbucks charging coffee all the time.

            1. re: monku

              monku....at Starbucks margins they are more than structured for petty charges.

              1. re: ospreycove

                It's a nuisance for me waiting behind someone like that (ha ha)....what people don't carry around a couple bucks for a cup of coffee these days?

                1. re: monku

                  Plenty? Probably at least 20-25% of the people I know don't routinely carry cash, or just carry a twenty or something for emergencies. And it doesn't take any longer to swipe a debit card than to hand over cash and have the cashier pull out the correct change. Or, God forbid, have the customer decide *they* want to pay with correct change and then spend 5 minutes digging around for those last couple of pennies. I'll make an effort to use cash at smaller places but I have zero remorse about debiting at Starbucks and it doesn't bother me if the people in front of me in line want to as well.

                  1. re: ErnieD

                    This issue is not about "The 20-25% of the people who don't carry cash. It is about a business decision of the OWNER. The Owner decides what is good or not good for his/her business. If his/her decision proves to be detrimental to the business; so be it , it was the OWNERS decision.
                    Having said that Starbucks business model is built on high turn rapid transaction time. That is Starbucks decision,they still have crappy coffee!!!!!!

                    1. re: ospreycove

                      Well, of course it is the decision of the owner, but the fact that some people don't carry cash has to factor in. I don't have any idea what percentage of people actually don't carry cash-I was giving a wildly general guesstimate of my self-selected acquaintance. But I usually don't, so if an establishment requires I'm going to skip it for any kind of impulse stops. I don't hold a grudge or think they're doing the wrong thing; I just don't go there unless what they serve is good enough to warrant a second stop. I was just responding to the monku implying that everyone has cash and that it takes longer to swipe a card than to pay cash-neither one of these are true in my experience.

                      I agree with you about Starbucks coffee for the most part. But they have wireless and there's one right down the street from where my stepson get out of football practice at a highly variable time every day. So it's a choice between there, a grocery store, or the parking lot in 108 degree heat for the wait, which highly increases it's appeal :)

                      1. re: ospreycove

                        You are correct. It is up to the owner, to decide what the payment methods will be. If they limit that to cash, and then fail, there is a lesson to be learned. If they limit to cash, and succeed, then they have enough patrons, who carry the cash in their pockets.

                        Now, besides a cache of credit cards, I also carry between US$400 and 600 in cash. However, I hate to be limited.

                        Had a recent event at a major, local resort, where I wanted to purchase wine for the table that I was hosting. I looked over the wine list, and made my choices. I handed the waiter my AMEX card, only to be told, "we only take cash for wines." Well, as I was about to buy US$1500 in wine for my table, I told her to cancel that order, and we'd get by with the event wines.

                        Had similar at an event with a non-hosted bar. When I handed my credit card to the bartender, I was told that it was too much trouble for them to process a credit card, and they would only accept cash. I paid for my four guest's drinks with my cash, and promptly canceled three events at that resort. In the end, I would guess that they lost about US$150,000 in business, due to that policy. Just saw that they were in receivership. So, while the owner does make the rules - the patrons vote with their pocketbooks - or their credit cards, as the case might be.

                        Hunt

                        1. re: Bill Hunt

                          Bill,
                          When a restaurant/Bar gets in financial trouble, one of the first things to go is credit card acceptance.
                          If the establishment accepts and processes the card. the net amount is credited to their bank account. Under the Uniform Commercial Code Article 3 (US LAW) a bank may set off a customer's funds if the customer has defaulted on a loan. So if the restaurant is behind on payments to the bank, the bank can grab the dposit and leave the resaturant unable to pay wages or suppliers.

                          A restaurant in trouble will take the cash and pay the employees in cash and pay vendors (who likely have cut off credit) in cash in order to keep operating in the futile attempt to save the business.

                          An establishment who stops taking credit cards has the smell of a sinking ship and should be avoided. Quality will suffer, as supplies are obtained whereever possible.

                          1. re: bagelman01

                            Also known as "Never keep a bank account at the bank that holds the mortgage on your house" theory from finance / banking 101.

                            1. re: jfood

                              not even for the extra 1/4% savings on the rate...

                              I do, but just transfer in the amount of the payment 2 days before the mortgage is ude. I've also never been late, so no setoff can occur.

                              Restarantuiers, However, are notoriously bad credit risks..........

                        2. re: ospreycove

                          of course, that owner decided to accept credit cards and part of that was accepting the terms the CC company lays out, which prohibits minimum charges.

                          1. re: jgg13

                            even if that is true and part of the contract with the CC company I personally think wherever possible we should try to help small businesses by paying cash for under $10. They lose a percentage of the sale AND a one off swipe charge. Small businesses often have a higher swipe charge and are less able to negotiate a good percentage charge. I think Discover is 5% and around 50-75c for every swipe.

                            1. re: smartie

                              See downthread - it is very recently no longer true.

                              In a hypothetical world where what I said was still true - if you want to help them out, feel free, but htey shouldn't be allowed to intentionally break the rules like that. IOW - you might be correct that the right thing to do is to pay cash, but they also should not be posting minimums. It's all academic now anyways.

                      2. re: monku

                        I never pay cash for coffee.

                        It's in fact faster (at Starbucks anyway) for the barrista to swipe and return your card than to take your money and punch in the price in the register and give you change back (or to sort through the money if you give exact change). With a credit card, you don't even need to sign anymore.

                        1. re: monku

                          Just my own personal experience as a cashier - a substancial number of people swipe their card for a single pack of gum, a bottle of soda, or even a single lollipop.

                          I myself don't often have cash on me during the school semester because my work and school hours greatly impair my ability to get to the bank within their open hours.

                    2. That's easy, then.

                      If they are a good Chow source, then play by their rules. Why shut down a good place over a rule like this? Pretend they are cash only and enjoy!

                      1. They're allowed to do this.

                        Previously, it was against their merchant agreement to do this, and you could call MasterCard/VISA to complain.

                        However, with the new credit card act that was passed in Congress and signed into law, they're more than allowed to do this now.

                        2 Replies
                          1. re: tzurriz

                            Yeah, the new rule (Durbin Amendment if you're particularly interested) also allows them to charge different (read: less) amounts if you use debit as opposed to credit. It does NOT allow them to charge different amounts for different credit card companies, e.g. Visa vs. AMEX.

                            Also, the highest the minimum can be is pretty low, something like $10 under the new rule, but don't quote me.

                        1. First, I am not an attorney. I am also not a resident of the state of CA, so this is just my opinion, and little more.

                          I have no issue with furnishing my credit card, when making reservations to most restaurants. I think that they need some sort of commitment, and am happy to furnish that.

                          Now, I know many, who will make reservations at a half-dozen restaurants, and decide at the last minute. Many will just stiff the restaurants, that were not chosen. I feel that this is in bad taste, and will call internationally to cancel, if I cannot dine there. That is my choice.

                          When I do make a reservation, that is my bond, and I do not mind a card being taken. If I cannot make it, I fully expect to pay a cancellation fee, and gladly admit that, when I cancel. Restaurants are designed to make money. If I deny them the opportunity, I need to cover my cancellation.

                          Just personal observations, with no legalities involved.

                          Good luck,

                          Hunt

                          1. I don't mind this practice as long as it's well posted. Some low volume restaurants have horrible contracts with credit card companies and may be paying a percentage of the transaction and a flat fee of up to $3 for each transaction. I wouldn't allow credit cards for small purchases if that were the case in my restaurant either.

                            1. I believe that the new federal law allows businesses to refuse payment by credit card if the amount is under $10.00. If it's for more than that, they must accept your card.

                              1. I puzzled by your desire to cause a "good chow source" grief.

                                Credit cards are one of those "hidden" costs of doing business. I say hidden, because there are so many types of cards, that when you look at the card, you don't know what the fee will actually be. There are "qualified" and "unqualified" cards, and many weird tiers in-between. These differences result in differences in fees to the retailer/restaurant can be significant. Hopefully the new legislation will clarify this some, but that remains to be seen.

                                So, if it's a good place, stop by the ATM and be a friend, rather than try and "keep them honest"... to who? The credit card gougers?

                                1. Just pay cash. The owner will love you, the servers will love you, everyone will be in love.

                                  17 Replies
                                  1. re: mrbigshotno.1

                                    Except for maybe me (or someone like me) the patron. They seem to be the forgotten figure in this equation.

                                    However, we can decide where to, or not to, dine.

                                    Hunt

                                    1. re: Bill Hunt

                                      Bill- I think you're overshooting. The establishment in the OP does take CCs, just apparently not for small charges, that's why the post was about a minimum charge, not about the practice of taking cards in general. It sounds like you carry enough cash to cover a cup of coffee, or other small ticket.

                                      1. re: cheesemonger

                                        Yes, upon a reread with a bit more time, I think that you are correct.

                                        For a minimum charge, I will change my stance.

                                        Thank you for pointing that out to me - greatly appreciated,

                                        Hunt

                                    2. re: mrbigshotno.1

                                      99.9% of the time I just pay cash. I'm glad to know that possibly people love me. My boyfriend thinks the waitress at one of our Sunday morning diners loves me, but I digress. The only drawback of the cash paying is the dreaded "daily special" that we won't tell you how much it costs. I know we did another thread on this, but it makes me so crazy.

                                      1. re: mrbigshotno.1

                                        the IRS will not be in love with anyone. dealing in cash can be a nightmare.

                                        1. re: KaimukiMan

                                          More credit card theft happens in restaurants than anywhere else.

                                          1. re: monku

                                            you just can't win.

                                            im waiting for the time when the server will show up at the table with an e-pad that has your tab, you swipe your card across the e-pad, and if you want, it will add the tip based on either the amount you specify or on the percentage you select.

                                            Certainly not foolproof (nothing is with technology) but a much better way of dealing with it than what we do now. Can you imagine letting the cashier at the supermarket or the department store walk off with your credit card... yikes.

                                            1. re: KaimukiMan

                                              "im waiting for the time when the server will show up at the table with an e-pad that has your tab, you swipe your card across the e-pad"

                                              I think that day is here.

                                              Got this new Starbucks iPhone app and you flash your iPhone screen at a receiver at the cash register and it will debit your Starbucks card (only available at Starbucks at Target Dept. stores right now).

                                              One of my credit cards and has that "wireless" symbol on it, I guess you don't even need to swipe it through the machine anymore.

                                              1. re: monku

                                                yes,but that is at the register, not at your table. still it allows you to keep your credit card in hand at all times.

                                                1. re: KaimukiMan

                                                  I believe that "swiping" at your table technology exists now.
                                                  Think I saw it mentioned somewhere in a CH post.

                                                    1. re: jfood

                                                      Haha, I was just about to respond with the same thing. They'll also quickly separate tabs at the table too!

                                                      1. re: jfood

                                                        JFood,

                                                        As usual, you make a great point. However, all is not nice there.

                                                        Going back two years, we used three cards for three dining sessions at a favorite restaurant in Mayfair, UK. All three got nicked. At first, the issuing banks could not figure out what happened, other than just some card numbers were stolen.

                                                        When it was just ours, we accepted that we needed a new account number, and nothing was charged. People were just picked up with the number.

                                                        Next day, my wife mentioned that her corporate card had also been compromised in the UK. Odd, but no big, red flags - yet.

                                                        Next day, our President of Philanthropy pointed out that HER corporate card had been compromised.

                                                        Time to do some thinking. Where on Earth had all three of these cards been used at the same time, and in the UK? No brainer for me - Le Boudin Blanc in Shepard Market, Mayfair. We'd dined there many times over the years, but on that trip, we dined there three times. First one was on me. Second one was business, and my wife paid. Third meal was a board dinner, and the other lady paid with her card. I called the issuing bank, and gave them the details.

                                                        I was immediately contacted by Interpol. They wanted details, and I had them, including dates, amounts and exactly when each card was used. They thanked me.

                                                        In a few days, I was contacted by Interpol again, but by another agent. He went over the details, and asked a few more questions, like did you see any autos parked on Trebeck Street with drivers inside? Of course I did. Every street in Mayfair has autos parked, with the drivers waiting for their charges. "About half of those are the Russian Mafia, and they are monitoring all credit card transactions," was the reply. He went on to comment that "by the time the restaurant has logged your credit card, that number has been sold several times." Oh, made me feel comfortable. He commented that they were working to shut these folk down, but due to diplomatic immunity, could not touch most of them - only the people, who buy the numbers from them. Did not make me feel any better.

                                                        Just something to think about, when using the little Euro wireless card swipers.

                                                        Our charities' suppliers claim that their wireless cannot be hacked into, and that their batting average is perfect. As anyone, who works with computers and security will tell you - no plan is perfect, and it seems that some in Europe/UK are pretty imperfect.

                                                        Hunt

                                                        1. re: Bill Hunt

                                                          must be a member of "Crooks without Borders."

                                                          1. re: jfood

                                                            Yes, something like that. Gotta' be a TV show in there somewhere - "CSI - Mayfair?"

                                                            Hunt

                                                      2. re: monku

                                                        Actually, the wireless use of credit cards exists in the US. We just hosted three charity events, and used the technology for the silent auctions. All worked perfectly. Now, off to address JFood's comment below.

                                                        Hunt

                                                  1. re: KaimukiMan

                                                    I love, love, LOVE the fact that I can say that I've done just that many times now! HOORAY for Square and iPads and happy small businesses! Look how far we've come in less that two years.

                                            2. As long as the visa logo master card logo is not posted on the store's Entrance door, If it is then report them to the card company.

                                              11 Replies
                                              1. re: a1wholesaleguy

                                                While contacting a credit card company may make you feel good, your advice in no way addresses the OP's question as to thge legality of a minimum sales amount to use a debit or credit card in California.
                                                The merchant agreement between a merchant and credit card company is a private contract, it in no way established LAW (something governments do, and yes I am an attorney).
                                                Furthermore, what good would it do a consumer who saw a MasterCard or Visa logo on a store door and was told there was a minimum sales amount for using his/her Discover or American Express card?

                                                1. re: bagelman01

                                                  That's obvious your an attorney since you didn't answer the OP's Question to the best of your Knowledge with out a fee.
                                                  Government has cause to intervene in the price-setting process only under two conditions: when markets are monopolized by a single provider (think of your local electric utility) or when providers collude to set prices.
                                                  Neither condition applies.
                                                  In Lay Man's term's if you Don't See The Visa Or Master card Logo on the front door of the store It's more than likely your going to be charged a fee to use a card .
                                                  As the expression goes, there is no such thing as a free lunch.

                                                  1. re: a1wholesaleguy

                                                    I didn't answer as to whether or not the practice is legal under California law, as I passed the Connecticut Bar and do my business here, I do not pretend to be well versed in California state law. In fact, it would be irresponsible for me to offer a legal opinion based on unknown (to me) California law
                                                    Fees have nothing to do with my posts, and you make erroneous assumptions and owe me an apology.

                                                    1. re: bagelman01

                                                      Beginning January 27, 2013, merchants in the United States and U.S. Territories will be permitted to impose a checkout fee on consumers when they use a credit card. Link To , Visa
                                                      http://usa.visa.com/personal/using_vi...
                                                      Done

                                                        1. re: a1wholesaleguy

                                                          The OP didn't ask about the legality of a merchant charging a fee. He/she asked if it was legal (or permissible) to require a minimum purchase amount for a credit/debit card transaction.

                                                          1. re: carolinadawg

                                                            On the same Visa site referenced above,if you do a search for "minimum" you will find that a minimum of not more than $10 is permissible.

                                                    1. re: a1wholesaleguy

                                                      I see no moral reason or legal obligation to do that. I'm all for helping a small local business and if I'm buying something small, I know they have fees per transaction, take that into account, and there's no reason not to ask up front what the minimum charge for a debit/credit card is- how hard is that? If i'm getting a $5 item, a small service charge is okay.

                                                      1. re: EWSflash

                                                        The other day, I was in a local bagel shop behind 15 teenagers. Sign on the front door and on the counter said "$5 minimum for credit cards." Each kid ordered their sandwich, asked the price, and ordered something else to make the total EXACTLY $5. Then they used their credit card to pay. Customers behind the kids got pissed, counter guys got pissed. As I was leaving, signs were removed and replaced with "$10 minimum for credit cards."