About Credit Card Merchant Rules

By Shelley Moore

  • Overview

    Credit card companies have numerous rules for merchants to follow, and business owners often violate these rules. The most common rule violation is when businesses require a minimum purchase to use a debit or credit card. Other credit card merchant rules include not setting a maximum limit on purchases, complying with specific security guidelines and more.
  • Common Violation

    It is not uncommon to run across a retail business or charity organization requiring a certain purchase amount for a debit or credit card transaction, typically $5 or $10. Businesses do this because they have to pay a surcharge on all card transactions. Typically the surcharge is a percentage of the amount plus a transaction fee, and a $.25 transaction fee is significant when the retailer is only making around $1 profit before the surcharge. Although MasterCard, Visa, and American Express all prohibit this requirement, the rule is seldom enforced.
  • No Maximum

    In contrast, credit card companies also specify that businesses cannot set a maximum amount on how much a customer can charge. Anyone with a high enough credit limit should be able to go to an auto dealership, for example, and charge a car, as long as the dealer accepts credit cards.

  • Identification

    MasterCard and Visa have a rule that retailers can ask for picture identification, but cannot refuse to complete the transaction if people will not supply the I.D. Some states have laws overriding this rule. Another rule states that merchants cannot complete a transaction if the card is not signed. In this case, the clerk must ask for a picture identification and the cardholder must sign the card on the spot, or the transaction is invalidated. This rule is frequently ignored in one particular circumstance--when the cardholder has written "See I.D." instead, in an attempt to deter fraud. Visa and MasterCard, however, specify that unsigned cards are invalid, and note that false personal IDs are very easy to obtain. One business which refuses cards that say "See I.D." is the United States Postal Service.
  • Security

    MasterCard, Visa, American Express, Discover, and the Japan Credit Bureau have a set of security regulations called Payment Card Industry Data Security Standard, commonly shortened to PCI. However, Visa estimates that about 25 to 30 percent of retailers are not compliant. In particular, small retailers may not want to invest in new hardware or software, as well as train employees to use it.
  • Considerations

    There are many other credit card merchant rules as well. Businesses are not allowed to discriminate by refusing to accept a card payment from anyone. Sales tax cannot be gathered separately as cash. Merchants cannot bill the customer's credit card for an outstanding delinquent amount. See Resources below for a link to other rules and more details.
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