caveat emptor: minimum what!?
Let me start off by saying that any business attempting to force a minimum purchase to use a credit card–while not illegal–is often in violation of their agreement with credit card issuers. A merchant can attempt to offset some business expenses, like limiting condiment availability, but they can’t make you spend more just to offset their transaction fees for accepting credit cards. This isn’t about that specifically, but it does touch on it. It’s more about bar tabs and establishments that act in ways similar to penalizing customers for using cards vs. cash, more specifically two experiences from this past weekend.
My first experiences with the idea of a “tab” definitely started while watching Bewitched. The bar Darrin Stephens would often frequent with Larry Tate after work or after one of Samantha’s family shenanigans never seemed to ask him to pay, always putting the drinks on his tab. The character Norm Peterson on Cheers was afforded the same luxury–with a delicious NASA-aided calculation joke in the finale. Since my lush abilities wouldn’t activate until much later in life, I thought it was cool, kinda like a credit card that wasn’t a credit card. I first started running my own tab in DC, usually with favorite bartenders at clubs. The societal move from handling cash to cards was slowly happening and it was nice not to dash to the ATM before going out or pay the crippling fees at the ATMs in the bars. Always seemed simple enough, hand over the card, order drinks, sign out at the end of the night. Now I can’t remember the last time I didn’t hear “leave it open?” or “would you like to start a tab?” when going out.
My first experience with a minimum tab was 4 years ago Thursday at Lucky Strike in Chinatown. I was waiting on a friend with plans to bowl and maybe see a movie–none of which needed me to have cash–and the bartender informed me that they place a $50 hold on the card, so that they can return it to you and charge the correct amount when you sign out. That actually makes sense to me, as an authorization isn’t a charge. While it may discourage you from using your card, it isn’t forcing you to spend $50, just making you decide whether you might need that freed up credit for the next few days or not.
Fast forward to Saturday late afternoon. After a nerd field trip to National Geographic and popping in & out of some shops, Randy and I thought about having a drink or two and found ourselves at JR.’s. I’m not often at JR.’s unless specifically invited by friends, so after ordering some drinks and handing over my card, I thought nothing of it when the bartender offered to start a tab. After I agreed, I was then informed that they not only have a minimum credit card purchase/tab of $15 but that they also hold your credit card and drivers license, noting that there was an ATM upstairs.
I can only guess the latter is to discourage people from leaving the former behind or maybe a means to discourage drunk driving or who knows what. Since I didn’t know how long we planned on staying, I agreed, though it was clear that I thought it was very weird. As it turned out, we had a drink each and decided to move on someplace else. The bar wasn’t really “hopping” and the bartender wasn’t very friendly, so this can’t have been a surprise. When I went to close out the tab, he repeated the $15 minimum charge and said he’d have to charge that to my card. I gave him a “Hell no” look and said that I hadn’t spent $15 (2 drinks, $6 each). He repeated the policy–note, this is the third time he’s told me something that in all likelihood isn’t allowed–and I said I’d find the cash and be done with it, which I did.
Our next stop was DIK Bar, aka “Windows” for another few drinks. It was similarly dead, but we had a few drinks, paying with cash this time. Still, I noticed over the bar a sign advertising an $8 minimum for credit card purchases and next to that a sign saying that any credit card tab left open overnight would have a 20% gratuity added to it. I suppose that’s considered the lodging fee for the customers’ cards? Again, the minimum purchase requirement isn’t allowed, however the overnight card fee… I dunno. Customers might see it as a fair inconvenience fee for not having the bar call their card company to report a lost card.
A quick look around the web shows this has been noticed in Chicago and Baltimore, but I imagine people see it as just “one of those things” that isn’t worth bothering about. As someone that primarily uses cards and is now in a travel path that doesn’t go past my banks’ ATMs, it annoys the hell out of me. Especially since these bars hardly fall into the category of “small business”. I might expect it from the Chinese takeaway spot behind my old place that doesn’t have a steady stream of customers, but from a bar that often gets so crowded you can’t move? I don’t think so.
Still, by all accounts these are normal practices. I mean, they have been for years, but a number of places have been taking down the minimum purchase signs and accepting the transaction fees as part of their business reality. They are learning that this is how to establish business credit, at least initially anyway. If ever there was a problem, I could certainly call Visa or MasterCard every time I encountered this type of thing, and when I worked for a credit card bank, I processed many similar complaints on behalf of customers. But instead, I think I’ll stick to the bars and bartenders that treat me well and don’t see my choice of payment as a hassle. Roll with the times, guys. Cash is no longer king.
In the case of bars, it might not just be the fees – it might be the hassle of keeping a tab open for someone (after all, it’s much easier to simply ring up the drink when handed to you, rather than having to keep track of who you are, where your tab is, figuring out how much that round costs, and writing it down). And $15 at a bar isn’t unreasonable – you paid almost that much with just 2 drinks. Plus, it’s not like they’re not being amazingly up front about it – he told you 3 times, and they even have an ATM you can use if you don’t like it.
So, um, quit your bitchin’! Yeah! 😛
@Esprix: So, to be clear, you’re defending the fact that the bar repeated 3 times, a policy that they’re really not allowed to enforce; and would have been pleased to charge me more than what I ordered simply because I wasn’t using the method of payment that they prefer? Oh, and that to keep a tab open on a credit card with my picture on it while I was 8 feet away, they needed to also hold my drivers license…
I know that Nellies is just as guilty of the minimum credit card payment ($15) and usually if I am there on my own, I’m not going to reach that limit unless I buy food. So it makes me less likely to even want to buy a drink there if I am short on cash.
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If they’re doing something that’s illegal, then they should be reported; as it is, as you note, a lot of places do it, so is it really illegal, or against their contract with the credit card companies? I wonder how true that is, given the widespreadedness of the practice.
Regardless, you talk with your money – if you don’t agree with their policies, you don’t go there. If they lose enough business, they’ll smarten up like other places have and not have minimums anymore. I know that’s what I do – I can’t stand minimums, either, so I don’t go to those places. A pox on them! 🙂
When it comes to a bar I never use a credit card. Bars love to over charge or put the wrong drinks on your card. When it comes to drinking, I’m a cash and carry man.
As I said, it isn’t illegal, but since it would do more places harm than good, it’s hardly worth reporting. But Saturday was the first time I’d ever been told “You didn’t spend enough money, so we’re going to charge you for more than you bought unless you find some cash.” Your average bartender or cashier may have no idea that it’s a violation of their card issuer agreement, but as each card issuer has a means to report it, it isn’t just “frowned upon”.
You know, since this is the first time you’ve encountered the situation, and it’s peeved you enough, I think it would be appropriate to report it, as a consumer, to the credit card company/ies, whichever one you used or intended to use, as well as the bar to let them know you hate the policy and that you’d rather take your business elsewhere. Change takes action! 🙂
How about just doing away with charging? Join the Back to Cash Movement! Credit cards are increasing fees and interest rates – even on good customers! My gal Suze Orman says it’s time to make a statement! Go back to paying for things in cash. Avoid the fees, interest rates and late payments. You’ll probably spend less and you will take your power back!
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Folks, it isn’t that hard. Pay in carnal favors like I do. ; )
Speaking as someone who works with credit card processors almost daily, no it isn’t illegal for a company to have a minimum amount for credit card transactions. While there are fees for processing credit cards (gateway, processor to contact the credit card company, send authorization back) they are very small and per transaction, not per amount. There are larger fees if the merchant doesn’t meet all of the requirements for CISP/PCI compliance (which they should not be accepting credit cards if that is the case) as well as business type. These fees can still add up. So in actuality, it does kind of make sense for a merchant to have a minimum, even if we, the consumer, don’t like it.