When a merchant signs up to take Mastercard, Visa, American Express or other credit cards, they generally are required to sign what’s called a “Merchant Agreement”. Â This agreement covers the rules and regulations that the merchant is required to abide by. Â Here is the Mastercard Merchant Agreement that I found on Mastercard’s website; I’d imagine that the other card issuer merchant agreements are similar.
It’s hundreds of pages long, but from my understanding (I’m not a lawyer, nor do I work in a bank), some of the salient points are:
- Merchants have to take all relevant credit cards
- Merchants are not allowed to charge a fee to take credit cards (though this seems to be different by state as I know some places (gas stations?) advertise a lower price for cash
- Merchants are not allowed to have a minimum amount that you have to spend to pay by credit card
Here are 3 stories I’ve run into from my own experience – if you’ve got a similar story I’d love to hear it.
I’m not “allowed” to take American Express
While on my recent trip through Arizona on my way to the Anthem Veterans Memorial near Phoenix (taking advantage of the cheap one way car rentals into Arizona), we stopped at the Little Caesars in Chino Valley, Arizona (north of Prescott).  When I attempted to pay with an American Express card, the employee said “I’m not allowed to take American Express“.  His phrasing was strange, so I asked a followup question.  He said that his manager has instructed him not to take American Express.  Something about the “fees being higher” :-).  And while I can totally commiserate with the feeling, I am also quite sure that is against either his franchise agreement with Little Caesars or their agreement with American Express.
Asking for additional ID verification
When I buy variable load Visa or Mastercard gift cards at my friendly local grocery store, I am frequently asked for additional ID. Â I believe the threshhold is $1000 where they take my driver’s license, swipe it, and compare with the name on the card.
Here is what I believe is the relevant section of the Mastercard merchant agreement
A Merchant may request but must not require a Cardholder to provide additional identification information as a condition of Card acceptance, unless such information is required to complete the Transaction, such as for shipping purposes, or the Standards specifically permit or require such information to be collected.
I’ve occasionally bought cards with a credit card in my wife’s name but I’ve also been turned away when I try to do so, because the names don’t match.
“I’m not gonna be able to put that on a card”
One of my favorite stories involves me trying to buy a spark plug at a local auto parts store. Â The total came to a little over $1 and I got out my credit card to pay because
- I put everything on a credit card and
- I rarely am carrying cash
When the employee saw my credit card, he drawled – “I’m not gonna be able to put that on a card!”
This phrase has now entered Miller family lexicon, of course now overly dramatic and exaggerated. Â We yell it out every time we pass the merchant in question (it’s on the way to Grandma’s house)
Again, I understand his reluctance to put that transaction on a credit card (he probably would end up losing more money to credit card processing fees than he’d make on the sale. Â But that’s part of the bargain of accepting credit cards, right? Â If you don’t want to do it, then don’t sign the agreement!
What do you guys think? Â Am I being unreasonable? Â Have you ever had a similar experience at a merchant? Â Or do you have insight from a merchant or card issuer perspective? Â Let me know in the comments
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Dan Miller travels with his wife and 6 (SIX!) children. He loves to help families travel for free / cheap, especially larger families. If you are looking for help, drop him an email at 
I booked with Budget in Italy, and they had the usual Prepay your tank option.
I was going to decline it, until they explained that if I returned the car with full tank they would automatically refund the prepaid price of fuel. I checked with Europcar and they have the same policy. Wondering if it’s a EU regulation. Makes it significantly more useful (especially as fuel price was below market).
What is the credit card that provides the best coverage? I used to use the AMEX add on protection that was primary but now use the Sapphire Preferred since it is primary and is free. If there is card that people generally feel provides better free coverage than Chase i’d love to know.
Not surprised this happened at Hertz at LAS. When I rented from there in April, the agent had a particularly obnoxious attitude, and the full-size car he assigned us was one of the worst we ever had.
There’s a whole ‘nother post on Hertz @ LAS coming up – maybe tomorrow if I have enough time 🙂
Depending on how important this is for you , maybe you should talk to American Express about these incidents . I would think it is all or nothing as far as accepting cards . Either a business accepts payment by card for any amount or they just do not accept cards . If there is a credit card logo at the door or counter then perhaps they are in legal violation if they refuse acceptance .It might also be entertaining to contact any corporate headquarters and ask why they don’t want your business .
Truth be told though , I probably wouldn’t bother since there is so little to gain .
Drive by and yell at them : good chance I would happily do that too .
To your first point in regard to not taking AMEX, the merchant has to sign a separate merchant agreement with AMEX, so they may very well not have been able to take AMEX. Depending on their processor, they may have a universal agreements for MC, Visa and Discover or may have separate agreements for each, but they will always have a separate AMEX agreement.
Yeah – that’s certainly possible and I didn’t check to see if there was any Amex signage. I just thought that it was weird the way the guy phrased it – I’m not “allowed” to take American Express, and he mentioned that it was his manager that told him he wasn’t allowed, because the fees were too high. It made me think that they had to say they took Amex because of Little Caesar’s but he (the manager / franchise owner) didn’t want to because of the fees
I have had Walmart and other places ask for ID when I used a credit card. I have never refused but wonder what would happen if I did. I usually wanted the stuff enough that I didn’t want a hassle so showed them my ID.
It is annoying that American Express is not accepted everywhere especially when I have $2000 to spend to get my opening bonus. But I think every business owner should have the right to choose what he accepts, including not taking credit cards at all. For small business to give up 3.5% to Amex is a lot. This is why they refuse to take the card – “I am not allowed “. Other cards take 3% or less.
I do not mind to show Id either. This is for my protection.
I totally agree that merchants should have the right to choose what they accept. My problem is that it is my understanding that Little Caesars has signed an agreement with American Express which says that they have to take American Express cards. This was something that they agreed to, but now this specific franchisee is choosing to violate that agreement
As a Christian, I want to love my neighbor as myself–including my neighbor that has a business–so I am going to avoid using a credit card where the business loses money because I’m only charging $1 or $0.50, because I would not want that done to me. Is it legal? Of course. Is it godly? No.
Thanks,
Thomas Ross
http://faithsaves.net/biblical-financial-stewardship/
As a small business owner I do not take any credit card transactions under $5.00 there is no less than a .25 fee +1.5% -3 1/2% fee for using said card so it ends up costing more than the product is worth in order to charge $1.00. If you don’t have the $1.00 in cash to pay for such a petty item than you shouldn’t be making that purchase
Yes. You sound like an over-entitled whiny b!t€h.
Why would you complain when the merchant would be losing money to take your card? Sounds an awful lot like taking advantage of someone and certainly not something one would do if they valued longevity of the CC game.
If I was the merchant, I would have just defaulted to the “right to refuse service” and kicked your ass out of the store since clearly, we’d have nothing to gain from your leechery
I put $20k on my Amex plat when buying a car. The dealership initially said there was a $1k max for CC, but I countered with the merchant agreement, saying it is a valid form of payment, and you can’t say no for a minimum OR maximum. It took a couple days, but they accepted it. The price was agreed on for the car before I said how I was going to pay. Needless to say they were not happy and professed that they were now going to lose money on the deal due to the fees.
Merchants are able to require a minimum purchase, as long as it us under $10, and it applies equally to all credit cards. This was implemented in the Dodd-Frank Reform bill in 2010. The Federal Trade Commission has a PDF FAQ on their page: https://www.ftc.gov/tips-advice/business-center/guidance/new-rules-electronic-payments-lower-costs-retailers
The Mastercard agreement you posted above does state this, but confusingly it is in the appendix labeled “Additional U.S. Region and U.S. Territory Rules”
The relevant section is on Page 222.
I also should add the Minimum Purchase rule is only applicable in the U.S.A. and territories.
Awesome! Thanks for letting me know about that
That may be a pre-Dodd-Frank agreement you found, or that bank has not updated their agreement. Since DF, we (merchants) ARE allowed to charge a fee to use a cc. I had quit taking them, due to the high costs, but now accept them with a very clearly stated 3% fee. I do not accept amex–too expensive.
Well it was a random agreement that I just found on the Internet so it definitely could be out of date :-). Thanks for your comment – I appreciate it. I’m actually fine if merchants want to charge a fee, as long as it’s adequately disclosed.
You wrote, “Merchants are not allowed to have a minimum amount that you have to spend to pay by credit card.” Texas state law permits some minimum. I don’t remember the amount but other states may do the same.
There is a Pho restaurant near my office that has an interesting method for being a cash only establishment. They don’t have any credit card stickers on their door so I don’t think they are in violation of any agreements. Instead at the register they have a sign that says, “Credit card machine broken today.”
I’ve been going there for a few years now and it’s still the same sign. I have often wondered why they don’t just put a sign on the door that says “Cash Only” like several other area restaurants have done.
That’s hilarious…