18

I'm pretty sure the answer is no for Visa/MC and basically no for Amex, and it's actually illegal in some states, but what if they just rephrase it as "We're giving you a discount if you choose to pay cash!"...

  • It's common practice at gas stations in (at least to my knowledge), MA and CT: money.stackexchange.com/questions/3207/… – bstpierre Aug 27 '10 at 15:15
  • Could you be more specific about which country you mean? In Australia for example, it's legal for a merchant to charge a fee if a customer use a CC. – dkam Aug 2 '11 at 17:51
16

This isn't so much a legal issue, the prohibition on giving discounts was written into the merchant agreements that most of the major credit card companies enforced on businesses that accepted their credit cards.

That is, until the recent Financial Reform Bill (2010) passed Congress. It changes everything. (The logic on this is a little convoluted, so read carefully)

  • Credit card companies can no longer prohibit merchants from requiring a minimum purchase amount to use a credit card. Meaning: That if merchants want to, they can now stop taking credit cards for a $4 latte.

  • Credit card companies can no longer prohibit merchants from giving discounts for cash.

Here is an article with a lot more detail: Financial Reform Bill Good News for Credit Card Holders

Here is a link to the actual bill details and content: HR 4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act

Here is the relevant part:

(A) IN GENERAL.—
    A payment card network shall not, directly or
    through any agent, processor, or licensed member
    of the network, by contract, requirement,
    condition, penalty, or otherwise, inhibit the
    ability—   
     (i)  of any person to set a minimum dollar
          value for the acceptance by that person of
          credit cards, to the extent that —  
          (I)  such minimum dollar value does not
               differentiate between issuers or
               between payment card networks; and  
          (II) such minimum dollar value does not
               exceed $10.00; or  
     (ii) of any Federal agency or institution of
          higher education to set a maximum dollar
          value for the acceptance by that Federal
          agency or institution of higher education
          of credit cards, to the extent that such
          maximum dollar value does not differentiate
          between issuers or between payment card
          networks.

(B) INCREASE IN MINIMUM DOLLAR AMOUNT.—
    The Board may, by regulation prescribed pursuant
    to section 553 of title 5, United States Code,
    increase the amount of the dollar value listed in
    subparagraph (A)(i)(II). 

This subsection is supposed to take affect "at the end of the 12-month period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010." In other words, July 21st, 2011.

  • do you know when these changes go into effect? I can't imagine that the big companies are unaware of them, but it doesn't appear that their policies have been altered yet. – theo Aug 27 '10 at 14:36
  • @theo - I updated my answer to include the bill text and the date it kicks in. – JohnFx Aug 27 '10 at 15:17
  • "Financial Reform Bill" link appears dead. – chux Oct 15 '18 at 15:40
8

I'm not sure about the laws in specific states. However it's part of their merchant agreement that they can not charge a fee for a customer paying with credit card. It's also against merchant agreements to require a minimum purchase to use a credit card, although this is less commonly enforced.

Apparently (http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html) merchants can offer a cash discount.

Offering payment by credit card, though practically a requirement in todays retail environment, is a privilege for the merchant. It's a way of making buying convenient for the customer. As a result, penalizing the customer in any way is not just against their agreement, but rather disingenuous as well.

edit: here's a bit more information about what they can and can't do. Amex prohibits discrimination, so if a merchant can't do something to a Visa/MC customer they can't do it to an Amex customer either. http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html

  • 2
    You are allowed to offer a cash discount (just not a credit upcharge). See cardratings.com/creditcardblog/blog/2007/04/… – Alex B Aug 26 '10 at 20:01
  • 2
    Apparently, Visa now allows a minimum purchase requirement: usa.visa.com/about_visa/ask_visa/index.html#anchor_4 – George Marian Aug 26 '10 at 20:12
  • Seems goofy that you can't add a surcharge, but you can give a cash discount. "Them: Sir, we have a 4% surcharge for credit cards" "You: What! That's illegal!" "Them: My mistake, I meant to say, your total is actually 4% higher, but we give you a discount if you use cash :P" – Michael Pryor Aug 26 '10 at 20:21
  • @Michael Pryor it does seem goofy but it's actually reasonable. The situation you describe can't happen. The price can not be changed, the merchant giving a cash discount is akin to using a coupon or loyalty program. The issue is that they can't charge the customer for using the card – theo Aug 26 '10 at 20:28
  • 1
    This answer was correct before the financial reform bill passed, but it is a whole new ballgame now. (See my answer) – JohnFx Aug 26 '10 at 22:40

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