Ever since credit cards first appeared on the scene back in the early 1960’s what merchants are legally allowed to charge, and what they are not allowed, has constantly changed.

On May 22, 2009, President Obama signed the Credit Card Act of 2009 designed to more fully inform consumers of interest charges, time limits for paying monthly charges, and other information. The purpose of the act is to help consumers use cards more responsibly and to require merchants and banks to make contracts clearer to the consumer.

The most important fact for the business or corporate cardholder to know is that these cards are exempt from the protections of the Credit Card Act. If your card is tied to APR’s (Annual Percentage Rate), which most are, then your interest rate can be increased as the Prime Rate changes. In addition, your limits can be reduced or your account closed without notice. Might make it tough to check into a hotel in London. You might want to think about a local bank account wherever you travel frequently. Banks are also on the lookout for any fees that might not be specifically covered under the 2009 Act.

Can a merchant require a minimum purchase amount to use a credit card?

Up until July 2010 the answer was no. Today, the answer is yes, thanks to the 848-page Dodd-Frank Wall Street Reform and Consumer Protection Act. Under previous law merchants could request but not demand that consumers pay with cash, or an alternative method, rather than a credit card for small purchases.

The merchants hurt the most were small convenience stores with small profit margins. Paying merchant fees for small purchases was just not profitable, so merchants taped hand written signs to their registers or counters letting customers know their minimums. So what was once illegal now has the blessings of your elected officials.

The new law says that merchants can require minimum purchases, with a credit card of up to $10.00, as long as they treat all cards the same. American Express often has a higher merchant fee and some merchants tried to extract higher minimum purchases for using it. It is also perfectly legal to give a discount for cash rather than accept a credit card.

Under the same law, the Federal Reserve will review and can raise that minimum based on economic conditions. For the exact wording of the law to add to your store sign, See: http://www.merchantprocessingresource.com/wallstreetreformact.htm – SEE: Section H. R. 4173—698

Merchant swipe fees and Debit Cards
Another provision in recent credit card laws was the reduction in swipe fees for debit cards. The amount a bank receives for processing debit card transaction was reduced costing banks millions of dollars in fees. So large banks retaliated by charging a monthly fee to consumers for using their own money to purchase goods and services with their debit cards.

Consumers retaliated against the banks by either cutting up their debit cards or closing their accounts and moving to other banks that did not charge the fees. The big banks got the message and within a month or so customers were seeing refunds credited to their accounts.

However, as mentioned above, banks are not going to take large reductions in revenue lying down. They are hard at work looking for ways to recoup those losses so keep an eye on all notices and paperwork you receive from your financial institutions.

Is anyone listening out there?

On an editorial note, I think its very interesting that the largest banking conglomerates in the land can be influenced by average citizens that will not tolerate a .17¢ per day fee to access their own money.
At the same time there are others borrowing up to $4 billion dollars a day that don’t seem to be affected in the least by the same citizens speaking very loudly about how their own money is being handled. Wouldn’t it be nice if there were a competing government we could move our account to? Perhaps then they might get the message.

Tom Egelhoff, www.smalltownmarketing.com, is the author of, “How to Market, Advertise and Promote Your Business or Service in Your Own Backyard.” Listen to Tom’s weekly radio show, “Open for Business, 11-2 PM Mountain Time every Saturday at http://kmmsam.com. Click “Listen Live.” Also, check out Tom on Twitter, Facebook and LinkedIn.