Reporting Merchants who Charge Fees for Cedit Cards
August 10, 2010 10:02 AM   Subscribe

How/where do you report merchants (and even city/county/government agencies) that are charging a “fee” for using credit cards as a form of payment?

I have done my research on the “rules” for merchants charging/not charging a fee for credit card use as a form of payment. (often as a percentage of the purchase, or flat fee). My understanding for the two major companies, Visa and MasterCard that this is not allowed. And only a “discount” can be given for other forms of payment such as cash. (And some other pieces in there such as the state you live in, and other companies like Discover who have dropped this option so merchants CAN charge). And so on, and so forth…

My question is, if you feel a company/merchant is inappropriately charging customers a fee for the use of credit card (such as Vista/MasterCard), where/and to whom do you report this to? (multiple places)?

(There are a couple places in my home town who charge a fee that I have done business through and I have questioned it before but they never seem to care/or desire to make a change).

Would you also report through the BBB? Any other suggestions?
posted by lutzla23 to Law & Government (17 answers total) 5 users marked this as a favorite
Definitely report it directly to the companies. They'll get in trouble- I reported my local grocery store for having a posted CC minimum, and after awhile, I noticed all the signs have been taken down.
posted by ThePinkSuperhero at 10:07 AM on August 10, 2010 [1 favorite]

Best answer: First, here's a good article on this.

also, in regards to maybe not paying a fee - but requiring a minimum purchase - check out this article on this might be changing soon:

As for who to contact, here's the link
posted by KogeLiz at 10:08 AM on August 10, 2010

I believe these rules are set by the Visa and Mastercard themselves. You can report the business to the credit card company themselves, and the potential consequence is them losing the ability to accept those type of cards.

There are also rules against having a minimum charge amount. Some small businesses in my 'hood have this, but I understand why they do it- the fees they have to pay the card issuer on small charges would kill them otherwise. There's a minimum amount the merchant has to pay, I believe, no matter how small the charge is.
posted by drjimmy11 at 10:11 AM on August 10, 2010

Response by poster: Thanks all - great info! I knew you guys would know!

I get a little torqued when I see this happen, especially when they are city agencies.
posted by lutzla23 at 10:17 AM on August 10, 2010

The credit card companies do charge merchants a fee, but the merchants cannot pass this on to the customers. (They may adjust the price of their goods as they see fit.)

In my mind, the extra business brought in by agreeing to take credit cards should offset the fees charged.

I've reported merchants to Visa or Mastercard, and have seen minimum purchase signs removed as a result.

As stated above, this might be changing due to recent legislation.
posted by SillyShepherd at 10:18 AM on August 10, 2010

City or municipal agencies might be a different story, as far as fees passed along to the customer/taxpayer.
posted by SillyShepherd at 10:19 AM on August 10, 2010

I believe there are laws out there that allow government and or utilities to charge a service fee to handle credit card payment of taxes(the IRS charges a service fee). This is outside the realm of the credit card companies. This is to pay for the costs of having a third party handle the card transaction, since government is not set up to handle that.
posted by Amby72 at 10:20 AM on August 10, 2010

Without knowing the situations you're dealing with, remember that it's legal to charge a convenience fee for some types of credit card usage. (See this for a pretty good description of when it's okay.)

That said, if the charge doesn't fall under the requirements of a convenience charge, report it to the credit card companies. They really do not like this sort of thing.
posted by punchtothehead at 10:21 AM on August 10, 2010

Response by poster: ThePinkSuperhero - were you able to recoup the cost of the fee that your local grocery store charged you?
posted by lutzla23 at 10:25 AM on August 10, 2010

Government is allowed to charge a fee -- the fine/payment/fee you are paying to the government is set by statute, and they CANNOT collect $58.50 instead of $60 when you have a $60 fee because they had to pay a $1.50 transaction cost to the credit card company. Government entities, in most cases, are allowed to pass the "convenience fee" (transaction cost) for using a credit card on to you.

Basically if you owe $2000 in tax and you pay with a credit card (which apparently you can sometimes do!), you don't get to pay $1950 to the government and $50 to Visa for processing ... you owe the government the full $2000, plus whatever the processing cost is.
posted by Eyebrows McGee at 10:41 AM on August 10, 2010

A question on reporting a merchant -- do they get a copy of the letter that you send? I ask because a local bar requires a $10 minimum for credit card purchases, and I'd really like that to change. But if I report them, are they going to recognize my name next time I hand them my card? I would prefer that not be the case, for probably obvious reasons.
posted by mudpuppie at 10:58 AM on August 10, 2010

When I pay local parking tickets online, the municipal websites hands the transaction off to a third-party vendor for processing. I get charged an extra $2 or $5 or something for using the services of that third-party vendor. It isn't specifically an extra fee for using a credit card and paying online, but it is effectively one.
posted by alms at 11:11 AM on August 10, 2010

With MasterCard and government agencies, the answer is "you don't get to complain." MasterCard specifically allows government and certain educational agencies to charge a convenience fee in face-to-face transactions.
posted by fireoyster at 11:23 AM on August 10, 2010 [1 favorite]

ThePinkSuperhero - were you able to recoup the cost of the fee that your local grocery store charged you?

My experience didn't include an extra charge- just a minimum. You could try contesting the charge, explaining that they charged you a fee on top of your purchase price. They might just refund the fee.
posted by ThePinkSuperhero at 11:34 AM on August 10, 2010

Right now, the US Mint will let you buy circulation grade dollar coins, with a credit card, as a purchase not a cash advance, without any fees, all because they are trying to get more people to use them in commerce (they last way longer than dollar bills, IIRC). This is an exception to the general rule.
posted by nomisxid at 12:28 PM on August 10, 2010

Just as a voice from the other side, I used to work at a very small nonprofit museum with a gift shop. In case you did not know, gift shop revenues in this world of decreasing donations and practically nonexistent government support are a vitally important source of operating costs for most museums these days. Our charges from the credit card processing company went up and up and up until we were paying so much in per transaction fees that it started seriously eating into our already small profit margin. Therefore, we instituted a $10 minimum on credit card use. You'll notice that the people who charge a minimum are all small merchants - big chains can negotiate their transaction fees easily. Small ones, not so much. They're not doing this to annoy you or piss you off - they're doing it because otherwise, they're going to have to raise their prices to a level that will lose them customers.
posted by mygothlaundry at 1:39 PM on August 10, 2010

They're not doing this to annoy you or piss you off

No, but they are doing it in spite of a contractual obligation not to have a minimum purchase for credit cards (and several other requirements designed to make using a card as flexible as using cash), new banking rules notwithstanding. There aren't exceptions for small businesses or non-profits. That means it's not in everyone's best interest to accept credit cards, but you can't pick and choose which pieces of a contract you'll honor.
posted by one more dead town's last parade at 6:58 PM on August 10, 2010

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