1) California state law prohibits cash discounts.
2) California state law prohibits minimum purchase amounts for credit cards.
Again, these two statements are wrong.
Now, I admit that I have made the claim above in the few cases where I have been charged a higher price for using my credit card or asked to add additional items to get my purchase price to some minimum limit, usually $10. I was surprised one day when I made my haughty claim that requiring a minimum charge was against the law when the merchant stated with complete confidence that it was definitely not against the law to require a minimum purchase.
Within a month when I went to order the services of a resume writer, I was told there was an additional charge for using my credit card. This time I wasn't so confident, so I held my peace and decided to do some research.
What is the truth?
1) California law does not prohibit requiring customers to make a minimum purchase to use a credit card. I should note that Visa and MasterCard agreements with merchants do forbid minimum purchase amounts. A merchant is violating this agreement when they refuse to take your card for a small purchase.
2) California law does prohibit charging extra to use a credit card. In other words, charging a surcharge to use a credit card is illegal.
3) The right to provide a cash discount is specifically protected by California law provided that the discount is made available to everyone. Additionally, the law states that any agreement between the credit card companies and the merchants to not provide cash discounts is void.
Merchants can offer a cash discount, but merchants can't lure you to the register with a low price only to tell you that they will tack on an extra charge if you want to pay by credit card. The difference is subtle.
Merchants take credit cards as a means to maximize profit. They know that more people will buy when they take credit cards, and people will spend more when they use credit cards. If the cost of taking credit cards is built into their prices then they will make an extra profit every time someone pays cash. If a merchant has stiff price competition then it may make sense to offer cash discounts as a means to attract customers away from the competition.
Regardless, every merchant should know that customers are annoyed and sometimes more than annoyed when they are told that there is a minimum purchase amount to use a credit card. And, charging extra is against the law, at least in California.
Magobrillo
Reference:
CALIFORNIA CODES
CIVIL CODE
SECTION 1747-1748.95
