The Credit Card Fee Hustle

It’s a shared feeling among many debit and credit cardholders. You head to the local grocery store to pick up a few items, but the $10 you left the house with is well short of the $13.88 you just racked up. You whip out your credit card to cover the charges and the cashier points out the “$20 minimum for all credit card purchases.” sign above the register.

Newsflash: Requiring a minimum purchase to use a credit card breaches the contracts retailers have with Visa, American Express, MasterCard, and Discover (though its agreement is not made public). It’s not illegal, it’s just not allowed based on the issuer’s terms and conditions.

Here’s the fine print on page 9 of the Rules for Visa Merchants: “Always honor valid Visa cards in your acceptance category, regardless of the dollar amount of the purchase. Imposing minimum or maximum purchase amounts in order to accept a Visa card transaction is a violation of the Visa rules.”

Page 91, section 5.3.9 of MasterCard Rules is fairly similar: “A merchant must not require, or indicate that it requires, a minimum or maximum transaction amount to accept a valid and properly presented Card.”

So, why the minimum?

Some may be truly ignorant of the rules associated with the cards they accept, according to, a Website designed to help consumers find the best credit card offers and provide consumer education on credit cards. For others, it’s about cutting costs.

Known as an “interchange fee,” retailers are charged to process every card transaction, says Craig Shearman, vice president of government affairs at the National Retail Federation, an advocacy group for retailers. Shearman says the rate varies but averages about 2% per credit card transaction or a flat fee between 10% and 20%. Factor in this fee, the cost of buying the item wholesale, and a transaction fee charged by banks, and merchants can sometimes end up feeling the pinch, Shearman says.

It turns out these fees are a hotly contested issue among card issuers and retailers. In 2008, more than $48 billion in interchange fees were paid to card issuers, averaging out to $427 per house, according to the Merchants Payment Coalition. Key lawmakers have stepped in on behalf of retailers, pushing for a flexible fee structure. Last month, Sen. Dick Durbin (D-IL) and Rep. John Conyers Jr. (D-MI) introduced the Credit Card Fair Fee Act in the Senate and House, respectively.

The bill is designed to allow merchants to negotiate interchange fees set by issuers. The bill is also designed to give retailers more power in negotiating fees with banks, who say the financial institutions collude to block retailers from negotiating lower fees.

What you can do?

Consumers can contact card issuers directly to file a complaint. Visa encourages its cardholders to call the number on the back of their cards to report the retailer. Retailers can be fined or ultimately see their credit card machines yanked from the store.

I, however, prefer a more instant gratification. Try speaking to the manager to explain why requiring a minimum payment is against the rules. If that doesn’t work, ask to speak to the district or general manager and explain the consequences that could be incurred if you were to report the store  to the issuer. The buck usually stops there.

Renita Burns is the editorial assistant at