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Credit card mininum purchase rules violate contracts

By Jessica Troiano | Special to amNewYork

September 17, 2008

Don't even try buying that pack of gum with plastic.

Many New York City businesses set a minimum amount for credit card sales, usually $10 or $15. It's a drill we know all too well: Even if you just ran into the deli for a sandwich, you may have to spring for chips and a drink to reach the minimum.

The policy frustrates customers but business owners say they would get slammed without it.

Merchants pay the credit card company every time you swipe your card -- so small charges can lead to small or nonexistent profits.

"If the customer charges two dollars and you're charged 50 cents, you're not making money," said Chris Stellatos, owner of Andy's Deli on the Upper West Side. "You're losing money."

Stellatos said he didn't think any rules prevented him from setting a $10 minimum. In fact, the practice, while not illegal, is prohibited by the credit card companies' merchant agreements.

MasterCard's contract states: "A merchant must not require, or post signs indicating that it requires, a minimum or maximum transaction amount to accept a valid MasterCard card."

Visa's rules are the same, while American Express and Discover basically follow the other companies' guidelines.

"If a merchant requires a minimum purchase, consumers should send a letter of complaint to the bank that issued their card," said Claire Rosenzweig, president and CEO of the Better Business Bureau of Metropolitan New York.

"They can also contact the BBB or credit card company directly."

The minimum charge policies are vexing, but are so widespread that customers have little leverage, said Rosalind Resnick, founder of Axxess Business Centers, a small business consulting firm.

"The reality is that here you are, you want to get your candy bar and newspaper and go," Resnick said. "What are you going to do, take this guy to court for $5?"

Nearly 1 in 3 consumer purchases are now paid for with a card, according to Visa statistics. The transition to a cashless society may be coming, but it hasn't arrived here yet.

"Especially in New York," she said. "Cash is king."