Tuesday, September 7, 2010

More Blowback From the Dodd-Frank Bill: New Minimums on What You Can Charge on a Credit Card

File Under: The Dodd-Frank Consumer Rape Bill

This was obviuosly snuck into the Dodd-Frank by some retail association lobbyist. It encourages you to buy more at a store than you planned, to reach the minimum.

Visa , American Express  and MasterCard are now allowing merchants to set a minimum dollar amount that consumers will be able to charge to credit cards in a single transaction, reports American Banking News


Visa was the first company which allowed its merchants to set a minimum charge amount. The company’s website now states, “U.S. retailers may require a minimum purchase amount on credit card transactions. The minimum purchase amount must not exceed $10 and does not apply to transactions made with a debit card.”

American Express’s merchant manual said that the company’s merchants cannot impose any restrictions on cards that aren’t also placed on other payment methods, but a representative from the company confirmed to The Consumerist that the recent Dodd-Frank act allows merchants to set $10.00 minimums for credit card transactions, but can’t differentiate by issuers or payment networks, meaning that American Express-associates merchants can set a $10.00 minimum, despite the company’s merchant manual.

MasterCard’s merchant guide currently reads, “A Merchant must not require, or indicate that it requires, a minimum or maximum Transaction amount to accept a valid and properly presented Card.” However, the Consumerist also confirmed that MasterCard would be modifying its rules to coincide with the Dodd-Frank act in the near future to allow merchants to set a $10.00 minimum.

It was later confirmed that Discover would also be modifying its rules to allow its merchants to set a $10.00 minimum charge amount.

Merchants are financially incentivized to set higher minimum charge amounts because it encourages consumers to make larger purchases. Merchants also often pay a higher percentage of the first dollar of each transaction than subsequent dollars in the transaction, making smaller transactions less profitable than larger ones.

For example, a merchant may be charged $0.25 for the first dollar and $0.02 per dollar after that. If that merchant made 10 sales at $1.00, they would be charged $2.50 in fees. If the same company made one sale at $10.00, they would only be charged $0.41 in fees.

4 comments:

  1. I hate government regulations, but as a retailer I have to say I fully support this change. After the government gets done confiscating my sales, the banks are the very next one in line taxing (they call it "fees") each one of my transactions. We don't accept Amex because while MC and VISA rates are high, Amex is ridiculous. We may in the medium-term future drop them altogether. In my personal transactions, I ask every vendor of big-ticket items with a human face if they will offer a discount for cash, and many more of them are saying yes these days.

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  2. I have seen numerous small businesses set minimum amounts for card charges for years now. Why shouldn't they be allowed to dictate that in their own business? I don't think this is new, but I think it will become much more pervasive. I'll be interested to watch what major companies do with this as they are paying massive fees to CC companies.

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  3. CashMoneyWhenAvailableNovember 11, 2010 at 8:21 PM

    Fuck you retail bastards. It's 2010. If I want to pay with a credit card I should be able to. Unemployment is at 10% ... be grateful for my business.

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  4. Um, Excuse me, but no, we're not "grateful" for your business. If you are going to pay for a bar of candy with a card, we LOSE money. Unless, you want prices to raise by at least .50 cents, and I'm sure you don't, considering your upset about the unemployment (news flash, the reason unemployment was down is because business's can't afford to stay open), keep your undereducated opinions to yourself or you're going to look very foolish.

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