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Minimum $10 Credit Card charge? Legal or illegal?

I owned a Chinese restaurant(Boston). But it so annoying that people have to use a credit card when their price come to under $10. Lets say $6, 7..etc. I already have a sign said in the restaurant or menu.

Why i hate credit card under $10, i have to buy credit card paper, Take alot of time for each transaction, too much fraud.

Anyway Is this legal or illegal? some customer said it is illegal.

But my response to him.. " it is not illegal since small business such as restaurant have their own policy"

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  1. In the recent past visa and mastercard did not allow merchants to impose a minimum for credit cards, but I believe it now is it's permissible.

    1. i have often seen this policy at small ethnic groceries. (Reliable Market has it and they're not little.)

      1. Before the $10 minimum wasn't legal and I'd b1tch about it. However the new financial reform bill did away with that so it's ok now.

        1. It was never illegal, but it violated the terms of merchants' agreements with card companies. A recent law, however, allows merchants to reject cards for sales under $10 regardless of what those agreements say.


          9 Replies
          1. re: Luther

            ^^^ This.

            My approach would be to request the customer pay in cash ("sorry, but we ask for a $10 minimum on credit cards. We'd really appreciate it if you could pay with cash if possible" or something like that) and if the customer still asks to pay with a CC, don't fight it. Most will probably respond to the request, and you'll avoid angering those that don't. If you still get too many credit card users, I guess you'll have to be stricter.

            1. re: emannths

              perhaps a 1.00 surcharge would solve this problem; you get discounts at some gas stations for cash.

              1. re: cambridgedoctpr

                That also used to be against the CC agreements that merchants signed. Since now neither are against the agreements, they might as well impose a minimum.

                Back in the day I'd call in and complain about merchants who had minimums now and then. I don't think it had any effect but one never knows. In theory they could have lost their credit card capabilities.

                1. re: jgg13

                  So someone wants to put a $3 coffee on a discover card.....$0.35 cost per transaction.....more than 10% of the profits down the drain......yet you still think you are entitled to use your plastic?

                  1. re: joe777cool

                    Yes, the customer is always right.....even when they are wrong.

                    1. re: HoosierFoodie

                      haha thats a good one! If I let every customer be right when then were wrong my restaurant would go out of business and that is a fact.

                      "Yes of course I am entitled to me senior discout on top of the other 2 discounts I am already receiving."

                      "No you DO carry x product, I saw it in a commerical the other day."

                      The customer is not always right, but they are still the customer.....they will be treated as a customer, with respect and dignity, but the line must be drawn.

                      1. re: joe777cool

                        Some people get overclocked when it comes to bargains, and spin on out into ultra-tacky mode and never think about the business. I'd never, ever have reported a small business for either a small surcharge or a minimum. If it was, say, Fleming's or P.F.Chang's I sure as hell would have, but not a local business. cripes, it's hard enough for a local business to make a living these days.

                        1. re: joe777cool

                          totally agree.

                          Last night a customer order 2 items on the phone for pick up, i told her the price with tax is $8.95. Guess what. She said she paid only $8.25 on 2day ago. I did the calculation again to make sure i was right. It come out to be the same $8.95.

                          I told her it could be one of my Co-worker miscalculated the price. Finally she didn't say anything..

                      2. re: joe777cool

                        These days? No. Before that law was passed - yes. The vendor signed a contract with the credit card companies which said that htey would accept plastic for *all* transactions. If they didn't want that they shouldn't have signed the contract.

                        I should note that this is largely academic for me as I primarily use cash - for all of the people who claim it is faster to use plastic, in my experience that's not the case.

              2. If my understanding is correct, the fee structure for merchants is lower for debit card purchases, so perhaps a combination of credit/debit might be a better solution.

                While I understand it from a merchants perspective, I tend to avoid any business that wont take a debit/credit payment - especially when they then direct you to their own ATM that tacks on a $2 or $3 surcharge for your withdrawal - generating additional revenue (albeit a minor amount per transaction) for the establishment.

                Aznmask: What about just factoring your additional 3% of credit surcharges into the price of each item, just making the $7.95 dish cost $8.25? You'll make a little more on each sale and you wont have to fight with your customers.

                3 Replies
                1. re: mikeinboston

                  I would rather NOT use my credit card for small transactions. It's no big deal for me to draw cash once a week and pay for coffee or drive through or a movie say, with cash. I know that merchants have to pay a swipe fee plus commission which is an extra cost to them. Plus my credit card bill would be full of small amounts to check over each month. I also worry about my card being cloned - it has happened numerous times to me so I try to use it as little as possible.

                  1. re: smartie

                    If going to a large corporate merchant I'll charge anything and everything. I want the miles. However, I'm especially mindlful about using it for small amounts at mom & pop places because I know that the minimum rates and charges they must pay are far greater. If they politely request I not use it for small puchases I generally comply, but if they strictly enforce a rule that really turns me off from the place. Sometimes I'm out of cash.

                    aznmask: In this country people use cards. I suggest you accept and embrace this fact. It's the cost of doing business as surely as is the utilities taxes and lease payments, and you probably don't want to alienate customers in this rough economy.

                  2. re: mikeinboston

                    surcharges to a customer might drive them crazy, WHY? I was thinking add 25 or 50cent. But i think it might be backfire.

                    Well my menu and a sign said $10 Minimum and they still go for it.. Sometime from those same customer, they just do it no matter what.

                    I usually don't argue with them and let them know for their future purchase that it is our restaurant policy to be $10 minimum.

                  3. Until very recently merchants who accepted credit cards for any transactions had to accept credit cards for all transactions, no matter how small. This is beacuse the contracts between merchants (i.e. your restaurant) and the bank that processes the credit card transactions, demanded it. Putting up a sign, a note on the menu, or refusing to accept credit cards for small transactions was a violation of that contract and opened up the merchant to significant fines should a customer ever report it. Unfortunately, the new so-called "consumer protection act" interfered with the private contract between merchants and banks, and now the banks are required to permit merchants to refuse credit card transactions under $10. This is a big loss for consumers. It also would seem to be a big loss for the government, as many cash transactions are not reported for tax purposes.

                    The law and contracts aside, I have two thoughts:

                    Before this law went into effect, and I'd see signs refusing small credit card transactions, it really annoyed me because someone was pretending that something was true when it really wasn't. But sometimes I'd see a sign that said something along the lines of "We are a small business and ask that you please try not to use credit cards for purchases under $10". Those signs are nice. Instead of telling me "you can't use a credit card even though I signed an agreement that says you can use credit cards" they are asking me politely. It baffles me that any merchant would make up a rule that is actually explicitly forbidden by his own contract, when asking politely has 99% of the same effect. Even today, when you can actually forbid a customer from using a credit card for a small transaction, putting up a sign that asks a customer not to is much more polite, and makes everyone happier.

                    It is very foolish and short-sighted for merchants not to accept credit cards for all transactions, despite the law now forbidding contracts that require them to do so. Studies show that the average spend for customers increases when credit cards are used, credit cards simplify accounting, reduce errors, save time, minimize loss, and most importantly, make customers happy. A fraction of a cent of credit card paper for each transaction is obviously a non-issue. I realize that the 2-3% of the transaction sounds like a real issue, but it is a small price to pay for all of those things. In short, arguing with your customers is the quickest recipe for failure.

                    18 Replies
                    1. re: lipoff

                      Had I read all the posts, I would have seen your response! Whoops, I hadn't realized it was no longer a law...

                      1. re: MinkeyMonkey

                        As others have said, it was NEVER a law. It was in the contract between the merchant and the credit card processor.

                          1. re: ajs42548

                            Of course, many here seem to think that it was an acceptable behavior. It never was until that issue went away recently.

                        1. re: lipoff

                          lol not when in restaurant business, (it never save time) plus restaurant pay fee even some percentage of that profit) a penny is a penny. SO it make such a big deal for small business.

                          Which is faster you pay cash for a $7 meal? while use credit card? i have to slide it.. and wait for the machines to response, then print out the paper, and give the customer a copy, and restaurant a copy. (that is more 30second process)

                          1. re: Aznmask

                            I really just can't disagree more with this attitude.

                            First, a surcharge for credit card use is very much against even the contemporary merchant agreements. Of course, you could raise your prices across the board, but that's independent of the payment method.

                            If your credit card processing machine is very old, and connects to the credit card server via a telephone line, perhaps it takes a while to process each transaction. A new machine, or an internet connection will speed things up. Depending on the kind of business that you do, you may also be able to get an agreement with your credit card provider to not require signing receipts for small transactions. If you've ever been to a McDonalds, for example, you'll see how much faster the credit card payment system is than dealing with cash. But whether at its faster or at its slowest, I doubt that any restaurant is throttled by the speed of its credit card processing.

                            The more significant issue is clearly the percentage fee taken by the credit card operator and the bank. I understand that this seems like a significant amount, but I think you'll find that it is actually illusory. A penny is not just a penny. First of all, customers tend to spend more when they can use a credit card. So a customer might tack an appetizer, an order of rice, or a drink when they don't "feel" the cost as much because they are using plastic, instead of more tangible cash. Also, many potential customers may not carry cash in this day and age. Many college students, for example, habitually don't carry cash, or don't carry much cash. By not welcoming credit cards for even the smallest transactions, you are loosing those customers entirely.

                            Credit cards also simplify your accounting, since the credit card transactions can be loaded directly into an accounting program. Workers can't steal from the till using credit cards, and you limit your liability of being robbed or just simply loosing cash.

                            In short, credit cards aren't free, but they are an investment in your business. Unlike other investments that cost money but might drive sales, they have very limited fixed costs. So unlike printing a batch of menus, renovating your interior, or buying advertising, you don't need a large upfront payment to use credit cards. The variable costs exactly track your sales volume.

                            Speaking as a customer of many establishments, I like using credit cards, even for small purchases. I like merchants that welcome my business, and I get miffed by places that refuse my credit card for small purchases, or that don't take credit cards at all.

                            Of course, only you, as the business owner, can decide for yourself the particular tradeoffs that make you happy, and I know I've written this post with strong wording. But I cannot encourage you enough to think very carefully about what you're doing when you discourage credit card use, or forbid it for small transactions. Alienating even one customer is probably not worth the "savings" in credit card processing fees.

                            1. re: lipoff

                              College students "habitually don't carry cash" because they don't have any. The average graduating college student has $4100 of credit card debt. That appetizer, or that order of rice, or that extra drink you mentioned, snuck up on them later big time. Not so for the cash customer.

                              Whether or not the convenience of credit cards that you cite, as well as turbocharging retailers with impulse buys, offsets the damage a credit-crazed population does to the underpinnings of capitalism, is a worthy topic for debate - elsewhere.

                              1. re: Veggo

                                Eh, my experience with people in the 20-something crowd these days (ie most of my coworkers) is that most of them carry almost no cash, and it has nothing to do with their student loans, credit card debt, etc. They all say that cash is stupid.

                                1. re: jgg13

                                  From Low spark of high heeled boys, by Traffic, 40 years ago:
                                  "The percentage you're paying is too high a price
                                  while you're living beyond all your means.
                                  And the man in the suit has just bought a new car
                                  from the profit he's made on your dreams."

                                2. re: Veggo

                                  My 23 yo daughter lives entirely without cash. She had cash stolen from her freshman dorm room the first week of school (by a friend of roommate). Since then she uses her debit card for almost any purchase. She has both a bank credit card and a car repair card, as well as department store cards. She has never paid a cent in interest.

                                  All those starbucks and movies on her affinity card yielded her a week in Florida recently and she has rec'd $500 in cash back checks this year on the bank card.

                                  She is typical in not using cash, but atypical in having no crfedit card debt at the end of the month.

                                  She will swipe a cup of coffee, ore a soda or burger. If an establishment doesn't take cards, she doesn't buy anything there. Now even the parking meters take cards.

                                  1. re: bagelman01

                                    Your daughter's dad went to Wharton and she was well parented! Zero interest paid says a lot, especially discipline, which most Americans lack. Debit cards imply spending money that has allready been earned and banked; credit cards - not necessarily. Those who can 'work the system' to their benefit are to be applauded, but a majority get behind the 8 ball and remain there.
                                    FYI, money center banks are evaluating customer acceptance/resistance to debit card user fees which would flush out the $1.95 purchases by cardholders.

                                    1. re: Veggo

                                      I'm late twenties...most of my friends carry no cash and other than those with a mortgage payment and a couple with student loans, most of my friends have little to no debt. People younger than me are even less likely to carry cash. Things really are changing as far as cash goes.

                                      1. re: iluvtennis

                                        It's nice to hear a few success stories. Those who crash and burn are less likely to volunteer their tale.

                                        I suppose my 'cash is king' posture is a consequence of my age, and some years of foreign living experiences. But as to cash being 'stupid' , I'll gather all the 'stupid' I can find.

                                      2. re: Veggo


                                        My youngest daughter started High School this year. In our local public schools all cafeteria transactions are handled with a debit card and pin number. We make online deposits to her account and she swipes her purchases. The cafeteria does not handle cash at all.

                                        The debit/PIN system has been in effect since she was in grade school, but previously, she could also pay cash, and we could send a check in to be credited to her account, no more handling money in the cafeteria.

                                        The POS system is so sophisticated that when depositing funds to her account we can restrict purchases to 'Type A hot lunch' al a carte, no ice cream or candy, or a maximum daily spending limit.

                                        The kids are being trained not to use cash. She has a Starbucks card (necessary for free WiFi) and regularly adds funds to a prepaid VISA Debit card for other shopping. The cash she earns babysitting is handed over to daddy who matches it 1:1 and deposits it into her bank and investment accounts

                                        1. re: bagelman01

                                          This and other replies are enlightening, and quite interesting. I hope the 'new normal' works each and every day. When I lived in the Yucatan, I knew when the ATM machines were down because all the ex-pats were scurrying around trying to borrow money from each other.

                                  2. re: lipoff

                                    I work on a college campus with literally *no* outside businesses within a four or five mile radius. On campus, the kids all use pre-loaded school issued cards, that they can have swiped to buy a cup of coffee from the coffee stand, lunch in the cafeteria, etc. It is clear they don't use cash. I have such a card myself, (it is also my Employee ID) and I could load it with money if I wanted to do so (I don't, usually bring my lunch, but I pay cash when I buy). I presume in some cases the parents are loading the cards, and this may have gotten them in the habit of not using cash. No idea if they use more credit because they carry no cash, but it would be interesting to know if increased use of debit or debit card alternatives (as opposed to actual cash) also leads to more credit card use. I'd bet among young people in particular it could.

                                    In town, hubby and I were in a very popular student hangout yesterday (which is one of a handful of places in our small town that is very inexpensive, relatively close to campus *and* has very good food. Chef-owned, and they serve a great combination of boba drinks, good ice cream, chinese dumplings and a few Taiwanese specialties. In other words, its popularity is very justified.) Anyway, I noticed a small sign (new, so perhaps in response to the changes in the regulations?) that read 'Cash only for purchases under $5, please'. Indeed, as the counter person was scooping up our ice cream orders, she asked if we would be paying in cash (we each ordered just a small ice cream cone, total cost $3 and change). It was as crowded as ever. I suspect the kids each order at least $5 worth, or combine their orders and still pay with a credit or debit card. Indeed, they don't even need cash to get from campus to the shopping center where this restaurant is located: there is a free bus for anyone with one of the campus cards I mentioned. In this case, I don't think the rule hurts the restaurant, and I don't begrudge them making it, particularly when their cut off is so small.

                                    1. re: susancinsf

                                      Similar situation here. I work for a university and use my employee ID for all purchases on campus (mostly beverages to go with the lunch I bring from home). I don't even have to load it with money - purchases are deducted from my pay check (this might not work for some, but has worked well for me over the past 5 years). Every time I use it I get a receipt with my current charge balance, and I can check online at any time. Students can add money to their accounts for purchases using their ID. The school is also partnered with a bank and students can link their campus and bank accounts, and have a combination campus ID and bank card.

                                      We have a handful of businesses in town that are cash only, like the frozen yogurt shop when no single item costs more than $5. I can understand why cash only is the better option for them. Before the change in regulation, we had a few places that posted charge limits, but more and more and going that route now. Most are places that have lots of <$5 transactions.

                                3. re: lipoff

                                  >credit cards simplify accounting
                                  but it doesnt simplify tax fraud. (i dont mean to suggest that is what's going on here).

                                  i did think it was interesting once at an ethnic eatery of my ethnicity i was offered a cash discount which i am almost certain wasnt offered to the white people there. i dont recall if the offer was in english or ethnic lang ... believe was in english.

                                4. It was illegal in Oregon, said so right in the front of the book that comes with the credit card machine. It is, or was, a federal offense but people still do it all the time, everywhere. Just let your customers know that you prefer they pay in cash for anything under $10. If they tell you it is illegal, you can just let them know you had no idea and apologize. No one is going to turn any business owner in for something so small as having a credit card minimum, that would be beyond petty!!

                                  But, for your own knowledge, just check the front pages of your credit card manual and see if it says anything. Or, call the merchant services number and ask them. If it really is still illegal and the operator is nice, ask them if it is a big deal. I'll bet they've never known anyone to be charged for breaking such a small law!!

                                  4 Replies
                                  1. re: MinkeyMonkey

                                    I know credit card company would accept any amount of payment because they make money no matter how small the bill come to.

                                    Of course the $10 minimum will violate the credit card company agreement. But they have to realized Credit card is just an another "payment option".

                                    Also my restaurant are the one that accept credit card since 6yr ago(longer than McDonald, or Burger king since they just accept it now.. While most restaurant my area dont even accept credit card at all.

                                    1. re: MinkeyMonkey

                                      No one is going to turn any business owner in for something so small as having a credit card minimum, that would be beyond petty!!

                                      Apparently, there us someone up thread that didn't, or doesn't, have a problem with turning businesses in......

                                      1. re: fourunder

                                        In particular, "turning a business in" means reporting to their counter-party in a contract that the business has violated the terms in the contract that they freely signed, thus incurring a penalty, such as a fine or termination of that contract, from the bank or credit card provider. It's not like turning in a small business to the police.

                                        The reason I had no compunction about doing this is because by putting up a sign claiming that they would refuse to accept credit cards for purchases less than $10, not only were they violating their own contract, and inconveniencing me, but they were doing something really anti-social --- trying to bully people with the mantle of supposed authority, instead of simply asking politely. No matter the contract, a business that puts up a sign that politely asks if customers could try to avoid using their credit cards would get overwhelming compliance, without lying or violating their contract. Instead, by claiming an imagined mantle they open themselves up to being reported to their counter-party.

                                        Of course, in todays world, this no longer applies. But I make the argument that it is businesses interests to take credit cards for all transactions, and so even if businesses are now able to refuse credit cards for small transactions, it is generally in their interest no to exercise that option.

                                        1. re: lipoff

                                          I don't recall reading where you mentioned you actually turned in any business for what you believed was unfair or in violation. Was your post removed?

                                    2. Additionally to the question at hand... what about giving people a discount if they use cash? Is that possible? That is, you knock off 5% of the purchase price if they use cash for any transaction... even those over $10. Would that be legal? Would that be a financial benefit (I honestly don't know what kind of surcharges merchants pay for their customers using plastic.)

                                      2 Replies
                                      1. re: velochic

                                        80% percent of my customer use Cash. That is not a good trade-off.

                                        1. re: velochic

                                          I've come across this for services outside of restaurants such as dog boarding and grooming. Never for food.

                                        2. Your customer is full of something. It is most definitely NOT illegal, and is perfectly sensible. I would certainly say that I'd PREFER them to use cash under $10 - I think that most people will. I seriously doubt that it was ever "illegal" - I'm sure that the credit card companies didn't like it, but I am by no means certain that any of us should care about the credit card companies' poor longsuffering bottom lines. There are ATMs everywhere. Use them. Customers, gotta love 'em, I guess.

                                          5 Replies
                                            1. re: lifeasbinge

                                              It wasn't jsut that the CC companies didn't like it - their contracts that the merchants signed expressly forbid it. That means that any merchant who had a minimum fee was violating their contract with the CC company. This is all in the past though.

                                              1. re: jgg13

                                                I'm trying to think of a good reason why I as a customer should care about the restaurant's relationship with the CC company. If you don't want to pay cash, don't.

                                                1. re: lifeasbinge

                                                  Uh what?

                                                  The problem was that a merchant who posted a minimum $$ amount to use a credit card was violating their agreements. That means that you could *not* choose to not pay cash at those establishments if you weren't racking up a bill of a particular amount.

                                                  In theory these merchants could have lost their right to process credit cards but it was rarely enforced.

                                            2. There are always a few people who, encountering a policy or store practice they don't like, say that it's "illegal" - it always feels to me that, by saying that, they'll get what they want.

                                              2 Replies
                                              1. re: lifeasbinge

                                                One of the most common "It's Illegal" store policies that is Bullsh#t is that:
                                                Swinsuits/Undergarments/Pierced Earrings may noit be returned due to health department regulations"
                                                This is generally an out and out lie.

                                                I am an attorney and when a merchant/manager tells me that the store's policy is the law, I always challenge them to provide the statute. All of a sudden the manager backs down and says it's what corporate told them. And when corporate HQ is in another state, I am quick to point out that the laws of our state apply.

                                                1. re: bagelman01

                                                  Maybe it's just illegal to re-sell such a returned item. Even if it weren't, I sure wouldn't want to buy it.
                                                  If a store had a polite sign requesting cash for purchases under $10 I would have no problem with it and pay cash. If I had no cash I would apologize and still use my credit card. Obviously if they enforced the cash only rule I would not buy anything. A little politeness and consideration goes a long way and it sounds like OP is nice about it. With swipe fees I could see how lots of small transactions could end up a much higher % that the typical 2-3% you hear about.

                                              2. I know it used to violate the agreements merchants had with credit card companies, but I don't think that's the case anymore. However, if I were you, I'd just post a sign saying that your restaurant's policy is cash only under $10. You may lose some customers, but you won't be breaking the law. Or you can do what another restaurant I frequent does and post a sign saying that even though you take credit cards, you don't like paying the fees, so you prefer cash. As weird as that sounds, it works, at least on me, because I usually stop for cash before eating there.

                                                1 Reply
                                                1. re: Isolda

                                                  I mentioned above on Sept. 27 that major banks are about to announce card user fees, and on Sept. 29 they did.
                                                  I still don't understand the tenacious resistance to carrying and using cash. For those whose cash was robbed by 'friends' , that's a different problem.
                                                  Cash works when electronics doesn't.