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Merchants allowed to set credit card minimum

June 12, 2012

The Federal Government is giving merchants the green-light on a way to potentially control some of their processing expenses by allowing them to set a minimum on credit card purchases. A minimum amount of up to $10 may be required from customers on credit card purchases.

Keep in mind, this new rule applies only to credit cards and does not include debit cards. And, while merchants are not allowed to choose a payment option for customers, discounts or incentives may be offered for payment by a particular method (including cash) provided there is no distinction made on the basis of the issuer of any check, debit or credit card.

As this new practice is approved, please review this following list of practices that are NOT allowed to ensure you are operating within the structure of acceptability for merchants when processing transactions.

Advance deposit: If a customer is billed for an advance deposit, that amount must be applied toward the balance of the purchase. The merchant cannot charge the deposit plus the full purchase price.

Blank sales drafts: Merchants cannot have cardholders sign a blank sales draft before the final transaction amount is known.

Cash: Cash disbursement from credit cards is prohibited by merchants and should only be handled by financial institutions.

Cash-only refunds: If refunds are accepted, they must be made to the card used for the original purchase or, if posted, as an in-store credit or exchange. Merchants doing otherwise are in violation. Also, return policies must be disclosed to the cardholder at the time of the transaction on the printed card receipt, near the signature line and in print at least ¼ of an inch in size. The card brands will not acknowledge signs or posters near the check out area as proper disclosure in the event of a chargeback or dispute.

Delinquency: The merchant cannot bill the cardholder’s credit card account for a delinquent account or for the collection of a dishonored check.

Discrimination: If a merchant accepts a card, that merchant cannot discriminate from whom it accepts the card – when properly presented – as payment.

ID: Merchants may ask for additional ID, but this cannot be a condition of acceptance.

Personal ID: Several states prohibit merchants writing cardholder personal information on a sales receipt.

Surcharges: Merchants are prohibited from adding fees on to credit card purchases.

Taxes: Merchants cannot collect sales tax separately as cash; it must be included in the purchase price.

Zero-percent tip: Merchants are not allowed to include an estimated tip in the authorization amount secured from the merchant bank. Taxicabs, limousines, bars taverns, beauty salons, barbershops, health and beauty spas, and restaurant authorizations are automatically assessed a 20 percent additional authorization amount to cover the expected tip.

If you have any questions on the new minimum or any of the listed practices, don’t hesitate to call MTG at 1.888.599.2209.

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