Credit Cards Online Information

You've gone for a quick take-out lunch, or maybe popped into the corner convenience store for a paper and a coffee. Just as you reach the cash register comes the realization: You don't have enough cash with you, and the handwritten sign on the counter states a minimum purchase - more than your modest amount - is required to use a credit card.While the practice is common, forcing customers to make a minimum purchase before paying with plastic is expressly forbidden by three of the country's four largest credit card companies. The prohibition is spelled out in the merchant agreements businesses sign when they accept cards from San Francisco-based Visa U.S.A., and Purchase, N.Y.-based MasterCard International Inc.We do run across this, and our merchant rules prohibit it, Randa Ghnaim, a Visa spokeswoman, said. Our policy is you should be able to use the card without any discrimination whatsoever about how much you spend. The practice is also prohibited by the Discover Financial Services' network of cards.Under our policy, they can't say, 'You need to make a minimum, or maximum, purchase,' Discover spokeswoman Jennifer Kang- Born said. The same merchant agreements also forbid passing surcharges along to consumers to help cover processing fees. Merchants and government agencies can add a surcharge, though, if it meets the qualifications of a convenience fee, usually levied on non- face-to-face transactions like filing taxes.The exception is American Express. Spokeswoman Christine Elliott said the company has no policy about the practice, but does forbid merchants from singling American Express out. So if the store has a minimum purchase policy, it has to apply to all credit cards.Credit card companies have been stepping up efforts to get people to use plastic for transactions under $25. Visa, for example, rolled out a no signature required campaign to step up usage for small purchases.According to a recent study conducted by Visa of its customers, an estimated 38 percent used credit cards at least four times a week to buy small-ticket items. The most common places people used payment cards at were gas stations and restaurants. Pharmacies and convenience stores were also high on the list.But as cards are used more frequently, business owners find themselves paying higher processing fees. Maryland Retailers Association President Tom Saquella said these higher fees can eat into the bottom line of retailers.It is a big issue for retailers, he said. Every time you pay with a credit card, they in turn have to pay the credit card processor. While it is prohibited, they just feel that on a small transaction the fees eat up whatever profit there is.Businesses taking MasterCard and Visa have the transactions processed by their bank, which usually takes a percentage of the purchase as a processing fee. Visa and MasterCard then get payment from the processing banks. Discover deals directly with the businesses, but also levies a processing fee. Bruce Phillips, senior economist with the National Federation of Independent Businesses, said for small businesses this can be a sizeable cost. Phillips said it is generally accepted that most transaction fees are around 2 to 5 percent of the total purchase.There are few businesses that don't take credit cards anymore, Phillips said. Most people will roll [the cost] into the price tag some way. It's taken as a cost of doing business - a definitely annoying cost.Discover, MasterCard and Visa all request that customers who witness minimum purchase policies contact them by calling the customer service number on the back of the respective cards. Rather than take punitive action, all three of the companies deal with merchants who violate the agreement by first alerting the business about how the policy works.