Executive Wealth Management

IT’S ILLEGAL!

Someone asked on Twitter this week: “Can retail stores compel a customer to spend a minimum amount for card transactions? For eg. no card transactions below R50?’

Some who responded thought they did have the right to do that, so clearly many consumers aren’t at all sure about their rights in the face of such retailer rules.

And that’s hardly surprising - the "minimum spend on card” thing has become common practice in many smaller stores, fuel station shops, and the like.

Some also think it’s okay for them to make their customers pay their bank fees for card transactions - they add a percentage, usually 5%, to the advertised or marked price of a product if a customer chooses to pay by card.

It’s a contravention of the Consumer Protection Act, which states, in brief, that the advertised price may not be inflated. It also violates their merchant’s agreement with their bank, which states that they may not pass on their bank fees to their customers.

Imposing a minimum spend for card payments is not covered by the CPA, but both Mastercard and Visa prohibit merchants from imposing a minimum transaction value on credit card payments.

I asked the Banking Services Ombudsman whether that also applied to debit card payments. Assessments manager Edrich Buytendorp kindly canvassed the banks on my behalf and came back with this:

“The banks have confirmed that for any card transaction, whether debit card or credit card, the merchant is not entitled to require a minimum payment. The merchant could lose their card machine all together if they are found guilty by their bank of this misconduct. Banks wont know this is happening and it is up to the individual to report it to the acquiring bank."

So there you have it. If a retailer expects you to pay extra for paying by card, or has imposed a minimum spend for card payments, report them to their bank. Their POP machine will be branded by the bank, so that’s how you know which bank to approach.