Debit card minimum spends.

Beaverman

Hi guys,

First day here so Hello and all that.

I am wondering if anyone here might be able to give me some solid information on debit card minimum spends, you know when you go into some shops and they will only accept a debit card (be it visa, mastercard, solo, etc) when you spend a minimum of like £5 or even in some cases charge you a small "handling fee".

The reason for this is that im seeing a growing number of retailers doing this and i have spoken to Visa who advised me that this is against the merchant terms and conditions. They also mentioned that i should complain to my card issuer who will take it up with Visa.

Other information seems sketchy at best, and it seems hard to get solid details. I have contacted my card issuer to get their position on it so we will see where that leads.

In the meantime, what are peoples experiences with this? Have you ever challenge it and what happened?

It is important that i mention that i know CREDIT cards are a different situation and there have always been transaction fees associated with these, im talking about DEBIT cards.

Thanks in advance.

somethingcorporate

A shop selling their own private goods can put whatever terms into the sale (as long as they remain legal) that they like so I don't see a problem with it. Same way some shops do not accept £50 notes. They are within their rights to impose whatever conditions they like.

Whether it is against their merchant contract etc has nothing to do with a contract between retailer and purchaser so none of your concern as a 3rd party.

On a related note, what does annoy me is when they impose % based fees on debit card transactions. I was recently going to spend £1000+ at a furniture shop but they would not take a debit card because they said it would cost them £40 in fees. They lost that sale after that little lie (or ignorance!?).

DCFC79

Never heard it being against the merchant terms and conditions.

arcon5

What exactly is it against merchant provider rules?

What is there to challenge? It annoys me when there is a 50p for example chargge for card payments under so much.... but at the end of the day it's their business, they can charge what they like and you as a consumer can choose not to pay and shop elsewhere. There's usually signs stating xp charge for debit cards ect.

Think about a newsagent for example, you buy a paper for 80p, which already carry low margins, somebody pays by card and thats 20p gone, leaving even less profit....

If you do challenge it they will probably tell you to pay it or leave.

arcon5

somethingcorporate wrote: »

A shop selling their own private goods can put whatever terms into the sale (as long as they remain legal) that they like so I don't see a problem with it. Same way some shops do not accept £50 notes. They are within their rights to impose whatever conditions they like.

Whether it is against their merchant contract etc has nothing to do with a contract between retailer and purchaser so none of your concern as a 3rd party.

On a related note, what does annoy me is when they impose % based fees on debit card transactions. I was recently going to spend £1000+ at a furniture shop but they would not take a debit card because they said it would cost them £40 in fees. They lost that sale after that little lie (or ignorance!?).

If you spend £1000 with me, you can pay in all 5p's if you want

MisterBrico

I thought companies did pay very small fees for debit card transactions

I know a lot of places don't accept AMEX because of higher handling fees.

DCFC79

MisterBrico wrote: »

I thought companies did pay very small fees for debit card transactions

I know a lot of places don't accept AMEX because of higher handling fees.

yes some firms do pay the card fees themselves but some retailers(maybe small ones, independants) charge the customer a small fee when paying by card or have a min spend.

Beaverman

This is why i am trying to get solid information and not just speculation or opinion. As far as i see it, the merchant agreement does affect me in as much as i have an agreement with my card issuer who in turn has this with Visa. When a retailer takes my card as an accepted form of payment, they are then also involved in that contract. I understand that the merchant agreement says that a merchant has to treat debit card transactions the same as any other transaction and not promote other forms of payment to the detriment of card payments (or words to that effect!).

Im curious to know more about it as im tired of being told i have to spend xx amount in a store to use a debit card. I understand that retailers have costs to cover, but thats the cost of doing business. Why should I as a customer have to cover their card costs? This should be accounted for in the product markup (I promise you that Tesco, Asda, Sainsburys, etc do this!). My concern is that if it is NOT allowed then it should be challenged, if it IS allowed then it should be a standard amount so there is consistency. What are the limits? Will my local petrol station tell me its a minimum of a full tank if i want to use my debit card?

Dont get me wrong, im not against retailers making money, i run my own small business in fact so understand the problems (No, i dont accept any cards unless its through Paypal!), im just wanting to get some factual information about the subject. So far many people are either ignorant to it or accept it.

visidigi

petrol stations have a minimum amount of fuel which you can dispense, so its not a great example.

But...whatever the outcome, you asked in your original post, what would happen if you challenged it? Probably nothing, but then again, the store can refuse to sell to you...

DCFC79

Go and challenge it then but you mgiht find you wont get served.

Viper_7

For Debit, the charge to the merchant is a flat rate - about 15p (but it varies based on volume of transactions you acquire)
for Credit, it's a % of the value of the transaction. (Which is why large purchases - such as airlines impost a % handling fee)

So for Merchants accepting debit for a £2.00 transaction is 15p loss in profit, where as for Credit the % fee is the same.

POS is very complex though, many merchants make money out of the rules. For example Amazon.co.uk is not registered in the UK. Nor is British Airways. both registered in luxemberg, so acquired transactions are classes as International, and they receive better interchange fees.

Always a balance of how many merchants you contribute to the Network to that of issuers.
You have to issue cards before you can Acquirer... so your shop down the road gets an extra charge from their chosen Acquirer (such as Barclays)
which makes again small card purchases eat into their small profits.