There is not doubt that credit card is one of the most powerful purchasing tools in the world. You can use a credit card to buy groceries at your local grocery stores, pay bills online, purchase electronics like MP3s, HDTVs, laptops etc., and fill your tank at pumps. Billions of transactions are done through credit card each year at US. Credit card companies even offer sign-up bonuses and promotional rates now and then. If you are a smart credit card user, you can save a lot of money by choosing a right credit card for you. However, there are still some common basics about credit card that you might not know.

1. Merchants can’t require a minimum transaction amount!

There are many grocery stores or Chinese restaurants that require you to pay by cash if your purchase is under a minimum amount pre-set by the store. This is obviously violate the credit card issuer’s merchant agreement. Under no conditions that a merchant can refuse to accept a credit card transaction because of a minimum.

Visa indicates that: Always honor valid Visa cards in your acceptance category, regardless of the dollar amount of the purchase. Imposing minimum or maximum purchase amounts in order to accept a Visa card transaction is a violation of the Visa rules.

MasterCard indicates that: A Merchant must not require, or indicate that it requires, a minimum or maximum Transaction amount to accept a valid and properly presented Card.

Anyway the merchants can not establish minimum or maximum amounts as a condition for accepting a Card. You can find similar requirements from Discover card and American Express.

2. Merchants have the right to refuse the unsigned credit card.

When you receive the welcome package from your credit card issuer, you can see “Not Valid Unless Signed” at the back of your credit card. This is quite understandable. The reason why the credit card companies require you to sign at the back of your credit card is to minimize the risk of credit card fraud.

Visa indicates: While checking card security features, you should also make sure that the card is signed. An unsigned card is considered invalid and should not be accepted. If a customer gives you an unsigned card, the following steps must be taken: 1). Check the cardholder’s ID. 2). Ask the customer to sign the card and then compare the signature on the card to the signature on the ID. “See ID” or “Ask for ID” is not a valid substitute for a signature.

3. Merchants can not charge a surcharge for using a credit card.

I know some Chinese restaurants always charge extra amount of money for using a credit card as payment. $0.5 is very typical for them. This violates the merchant agreement!

Visa requires: Always treat Visa transactions like any other transaction; that is, you may not impose any surcharge on a Visa transaction. You may, however, offer a discount for cash transactions, provided that the offer is clearly disclosed to customers and the cash price is presented as a discount from the standard price charged for all other forms of payment.

MasterCard requires: 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. A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used, or as the Corporation has expressly permitted in writing.

4. Merchants cannot require you to present ID

I have two posts about how to deal with “Show ID with Credit Card” problem. (post 1 and post 2) Some merchants may require you to present your ID at  checkout but it’s a violation of the rules.

Visa: When should you ask a cardholder for an official government ID? Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot refuse to complete a purchase transaction because a cardholder refuses to
provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures. Laws in several states also make it illegal for merchants to write a cardholder’s personal information, such as an address or phone number, on a sales receipt.

5. Merchants are not allowed to place a hold for the estimated tip

The estimated tip is really common nowadays at restaurants. For example, if you go to dinner and final amount is $200 and you pay with a credit card, the restaurant might  try to “authorize” your card for $230–a 15% tip. Believe it or not, it’s a violation! What will happen if you don’t like their services and want to offer only 10% tip? Or you may want to leave cash tip! There is no way that a merchant can hold an extra amount of money to estimate your payment!

Visa requires: For restaurant, taxicabs, limousines, bars, taverns, beauty/barber shops, health/beauty spa merchants transactions with a Visa credit or debit card, authorize only for the known amount, not the transaction amount plus estimated tip. Cardholders now have the ability to check their credit or checking accounts almost instantaneously via phone, the Internet, or an ATM. Consequently, an authorization that includes an estimated tip can reduce a cardholder’s available funds or credit by an unrecognizable or unexpected amount.

If you meet any of above mentioned circumstances, you can call Visa, MasterCard, Discover Card or American Express. Or you can call the numer at the back of your credit card.