Many business establishments think that they are able to maximize profits and save on cost by passing on to cardholders the commission paid to bank card issuers. The malpractice is more commonly called ‘surcharging.’
These merchants are actually discriminating credit card holders in favour of cash payers, unwittingly discouraging the use of credit cards. They fail to realize that customers will remember the added cost and will most likely choose to go to another shop that do not surcharge.
In the long term, such establishments lose business coming from the big spenders who prefer to carry cards in their wallets instead of cash.
Based on the Merchant Agreement signed by the business establishment, both Visa International and MasterCard International do not actually condone the practice of surcharging. According to Visa and MasterCard Operating Regulations, “a Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments.”
(Source: http://www.mastercard.com/us/merchant/pd…)
This writer very recently had a meal with his wife at a Thai restaurant in Rouse Hill, NSW. He was compelled to pay cash because of an additional 2 per cent being charged for the use of his credit card.
Visa and MasterCard international operating regulations also prohibit minimum charge amounts. American Express’s regulations do not explicitly prohibit minimum charges, but its policy is to discourage any merchant practices that create a “barrier to acceptance.” Amex does prohibit “discrimination” against the Amex Card, however, so if a merchant has no minimum charge for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum charge. – ?
(Note: The author of this article spent more than 20 years as a senior executive of Visa and MasterCard credit card centres in the Asia Pacific region and is still regarded by his peers as an authority on credit card operations.)