Is Minimum Spend Amounts to use Card Payments Imposed by Merchants Legal?

bigbadboogieman on 05/02/2018 - 00:23

I have seen some merchants recently who have imposed minimum spend amounts like $10 to use Card payments (including EFTPOS). Even today I went to get some small stuff to top-up my groceries where total was like $7 and when I asked to pay by card, they said minimum $10. I apologized and paid cash which I (fortunately) keep in case of emergencies.

Now I am wondering:

  • Is this practice legal?
  • If illegal, are there any actions consumers like myself can take apart from stopping to buy from these merchants?
  • If legal, I am guessing there is nothing that can be done but how can the govt. get around the cash economy if businesses keep discouraging card payments.

There are a few names which are relatively big merchants but obviously not the biggest. I am pretty sure I am not allowed to post specifics here.

Financial

Comments

  • citygal on 05/02/2018 - 00:30
    +1

    Is this practice legal? Yes
    If illegal, are there any actions consumers like myself can take apart from stopping to buy from these merchants? Not applicable, as it's legal
    If legal, I am guessing there is nothing that can be done but how can the govt. get around the cash economy if businesses keep discouraging card payments. —> Yes, it's nothing can be done. It's up to the merchant's discretion to offer card payment and minimum spend. It's free market. If people spends less than a $5, small business can be struggling to survive as they don't earn much then.

  • [Deactivated] on 05/02/2018 - 00:36
    +8

    its legal,
    either pay the surcharge, buy over the minimum or pay by cash
    its not hard.

    • bigbadboogieman on 05/02/2018 - 11:31

      I understand that it's not hard and that's what I did, i.e. paid cash. But there is nothing wrong in asking a valid question.

      In some other developed countries like Australia, it is illegal to set minimum spend limits. In others where it is not illegal, merchant agreements with banks or service providers prohibit merchants from setting these limits.

      If you can read my post, I am not talking about the small merchants/corner shops but rather bigger businesses. These merchants have franchises at major malls like Westfield, implementing these restrictions which I think is a disgrace and has some ulterior motive than just transaction fee recoupment.

      Please bear in mind that surcharges are already transferred to the customer. This is more to do with simply not allowing a card because minimum spend is not met. Also the fact that cash handling, associated insurances and risks, are more of a hassle than transaction fee.

      • ronnknee on 05/02/2018 - 19:00

        In some other developed countries like Australia, it is illegal to set minimum spend limits.

        Source?

        • Baysew on 06/02/2018 - 11:26

          Just look at the over crowded jails in those countries.

  • DarkOz on 05/02/2018 - 07:01
    +3
    • It's legal.
    • It's legal so all you can do is go somewhere else if you feel so strongly about it.
    • It's not true that businesses are discouraging card payments. Please understand that merchants are paying for card transaction fees. That merchant probably pays $0.25 transaction fee for your $7 purchase which equates to 3.57%.
    • Sage on 05/02/2018 - 08:06
      +1

      all you can do is go somewhere else if you feel so strongly about it.

      Nothing wrong with a bit of discussion and or winge about it here though.

    • JimmyF on 05/02/2018 - 08:18
      +3

      Please understand that merchants are paying for card transaction fees. That merchant probably pays $0.25 transaction fee for your $7 purchase which equates to 3.57%.

      Credit cards are a fixed %, so it doesn't really matter if its $1 or $100 put on them via a credit card, the % cost to the business is the same.

      EFTPOS (aka chq/sav) is normally just a flat surcharge, around 10-20c in most cases regardless of the value. Ours is around the lower end, 12c from memory.

      That merchant probably pays $0.25 transaction fee for your $7 purchase

      Even so, cash has a cost to 'handle' as well. end of day counting, banking etc.

      It's not true that businesses are discouraging card payments

      I would disagree, most of the holdouts these days have been well known 'cash' businesses, that just don't want the cash to 'disappear', otherwise its harder to make 'money' disappear out of the business if you know what I mean!

      • one man clan on 05/02/2018 - 10:11
        +1

        Credit card surcharges really annoy me. It's a cost of doing business like any other cost. Plus its completely predictable. Adjust your pricing if you can't afford it. You don't see an electricity surcharge or a payroll tax surcharge. Build it in to your damn prices.

        • tomclancy on 05/02/2018 - 10:48
          +1

          But then those that pay cash would complain they are paying an unnecessary surcharge. I think it's totally fair - passing the cost to the consumer who creates that cost.

        • one man clan on 05/02/2018 - 11:38
          +2

          @tomclancy: There are tons of costs that are not egalitarian. Toilet paper for people who don't use the bathroom. Free wifi in a cafe for those that don't bother. Coffee cups for those that bring their own keep cup. As pointed out elsewhere, there are costs associated with cash - namely balancing a till at the end of the day, as well as time costs of dropping money in the safe and doing the banking. It's been a long time since I worked retail but it took about 20 minutes at the end of each day to count and balance the till.

          As a customer, it bothers me when I pay a surcharge to the point where I would consider shopping elsewhere and IMO it's in the interests of the business to not have it.

        • DarkOz on 05/02/2018 - 11:43

          It's a cost that the customer choose to place onto the merchant and the merchant can choose to cop it or charge back. If it's annoying to you then pay cash or go else where. I am sure the merchants are aware of the possible boycotts.

          As someone else had mentioned, if you build the surcharge into the normal pricing everyone else who pay by cash is being overcharge and that's not fair to them.

        • one man clan on 05/02/2018 - 11:45

          @DarkOz:

          Who cares though? Businesses aren't "fair" they are businesses. If you lose sales because it annoys people that there's a credit card surcharge, you are running a bad business model. You aren't attracting people who pay cash by having the surcharge.

        • JimmyF on 05/02/2018 - 12:29
          +1

          @one man clan:

          Coffee cups for those that bring their own keep cup

          Ummm most are now starting to offer a discount for BYO cups.

        • tomclancy on 05/02/2018 - 12:38
          -1

          @one man clan:

          I have no problem with you being annoyed or even boycotting businesses that charge a surcharge. That's your right.

          If you lose sales because it annoys people that there's a credit card surcharge, you are running a bad business model

          I run a small business which imposes fees for credit card payments. I would argue that customers who would shop elsewhere due to passing on a reasonable credit card surcharge are customers that I don't want. It's an easy way to push away the pain-in-the-arse types. Business owners are all too familiar with customers that cost us more time/money than the others - as a business if you can turn those customers away you will do better in the long-run

        • one man clan on 05/02/2018 - 13:01

          @JimmyF:

          Knew someone would nitpick that

      • bigbadboogieman on 05/02/2018 - 11:21
        +1

        I agree given even though I am employed I come from a predominantly business oriented family, I think handling cash in today's world is far more expensive than card transaction fee. Surcharges are transferred to the customer anyway.

  • tanksinatra on 05/02/2018 - 07:30

    Merchants are permitted to set limits and charge surcharges if they wish, as long as these surcharges actually reflect the cost to the business of accepting credit card payments.

  • Sage on 05/02/2018 - 08:05
    +2

    It's a pity when they have a minimum purchase. I've learnt to check before shopping.
    For me, most of the time I don't make a purchase at all if they want to have this restriction.

  • apple2016 on 05/02/2018 - 10:24
    +3

    small business often have to pay a higher cost per EFTPOS/credit transaction as they do not generate high volume.
    Also building the cost into the product would be unfair to those paying cash!…

  • Trying2SaveABuck on 05/02/2018 - 11:28

    Its legal but it is a load of bullshit

  • Findo on 05/02/2018 - 12:45

    The CBA doesn’t allow minimum spend limits for their terminals, but they don’t really give a crap. You can call up and complain to the powers to be but at the end of the day nothing will happen.

    • Davo1111 on 05/02/2018 - 13:31
      +1

      in the end, the shopkeeper doesnt have to sell you anything if they dont want to.

      • Findo on 05/02/2018 - 13:34
        +2

        Most of the time stores like that have nothing to offer anyway.

        • Davo1111 on 06/02/2018 - 12:09
          +1

          so the minimum spend amount won't worry you then

  • ronnknee on 05/02/2018 - 14:23

    We had this discussion not too long ago.

    https://www.ozbargain.com.au/node/354495

    • bigbadboogieman on 05/02/2018 - 17:47

      Slightly different discussion. We are not questioning surcharges. We are questioning minimum spend limits and not allowing customers to use card at all of the total is lower.

  • sahh on 05/02/2018 - 21:35

    Are you sure you can’t mention stores? It’ll be good to know which ones!

    • bigbadboogieman on 05/02/2018 - 21:57

      Tried to PM you two names which I have encountered, says user sahh doesn't accept new conversations.

      • sahh on 05/02/2018 - 22:38

        Apologies amended

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