All School of Architecture junior Allison Grimm wanted last Friday was a Very Berry Smoothie from Stucchi’s — a simple request, only $4.79 with tax.
But as she strolled into the State Street ice cream shop with only plastic in her pocket, Grimm ended up paying $0.21 more to reach the store’s $5 minimum for credit and debit card purchases.
It’s not uncommon for stores like Stucchi’s to require customers to spend a certain amount when paying with a credit card. But such rules are explicitly against the contract agreement storeowners sign with companies like Visa, MasterCard and American Express to be able to accept those credit cards.
According to the MasterCard Rules, presented to all businesses that wish to accept MasterCard as a form of payment, “a merchant must not require, or indicate that it requires, a minimum or maximum transaction amount to accept a valid and properly presented card.” Every major credit card company stipulates similar rules.
Tristan Jordan, a spokesman for MasterCard, said the rules are laid out in the contract agreement that every merchant signs.
“Our rules are designed for merchants to follow,” he said. “They are communicated to the merchants. It’s part of their choice to do business.”
Jordan said MasterCard implemented the rule over 40 years ago when the company was created, to ensure that customers have freedom of choice in how they pay.
“Merchants don’t need to accept cards, they are invited to do so if it’s the right decision for business,” he said. “Part of that decision is to play by the rules that are established by MasterCard.”
But even though it’s clearly a violation of the contract agreement, many Ann Arbor businesses don’t play by the rules, unknowingly or intentionally breaking the agreement.
Like most liquor stores in Ann Arbor, Blue Front on Packard Street and Sgt. Pepper’s on East University both have $5 minimums. Middle Kingdom and Kai Garden, both Chinese restaurants located on Main Street, have $10 and $5 minimums, respectively. Many other cafes and convenience stores have varying credit card minimums, as well.
But when asked about their minimums, most business owners refused to be interviewed, while others seemed to change their minds about the firmness of their credit card policies.
“I don’t know, they don’t have cash I still take the credit card,” Kai Garden Manager Tina Yen said nervously when informed about the violation. “First time, I give it to you.”
Eddie Galyana, owner of Strickland’s Market on Geddes Avenue, said he is completely aware of the contract agreement that restricts setting a minimum for credit card transactions, but he still has had a $5 minimum for the past four years.
“I’m aware that it’s against the rules, but I have to do something to survive,” he said. “Credit card companies are not giving us any choice at all.”
Galyana said he is forced to set the minimum because the transaction fees he is required to pay, totaling over $800 a month, negate the benefit of sales less than $5.
Jordan said merchants individually negotiate transaction fees with their banks, so the amount they are charged per transaction varies. But he said the advantages of accepting cards outweigh the cost of transaction fees for most merchants.
“My position is that accepting cards is a choice,” Jordan said. “The fees are small in comparison to the enormous value merchants get for accepting them.”
But Grimm, 21 cents short of that $5 minimum and still craving an ice-cold berry beverage, had no idea that setting a credit card minimum was a breech of contract.
So how did she overcome this obvious dilemma?
“Just charge me five dollars,” she said without missing a beat.
Stucchi’s manager Kate Budden said more than one-third of the store’s transactions are made with credit cards.
And because Stucchi’s only has two items on its menu that cost over five dollars – $5.29 for a banana split and $5.18 for a large, homemade waffle cone with three scoops – Budden has suggested many ways for costumers to reach that minimum.
“Sometimes I’ll say ‘OK, well do you just want to charge it for five dollars,’ even though it’s not five dollars,” Budden said. “Or what I always say is buy your friend’s and have them pay you cash.”
Stucchi’s owner Kevin Phelps strictly enforces his $5 credit card minimum.
With two laminated signs that read, “Credit Card Minimum $5.00,” in large, black letters, a small, handwritten reminder of the rule taped above the credit card machine and a lengthy, detailed message about the minimum titled, “Everyone Read,” posted on the employee bulletin board, employees like Budden never forget the store’s policy.
The notice on the bulletin board located in the back of the ice-cream parlor explains Phelps’ reasoning behind setting the minimum, even giving employees tips for getting more money out of customers who need to meet the requirement.
“For every credit or debit card swiped on the machine, I am charged on average ($0.40). This is why there is a $5 minimum charge,” the note reads. “If you have a shake ($4.87) and they want to charge it, ask if it is OK to make the total $5 or offer something else like a bottled water, etc.”
“I just think it’s really stupid cause he’s forcing people to buy stuff that they don’t really want,” Budden said. “It’s so inconvenient for the majority of people trying to charge.”
But with more and more people dropping cash for credit cards in this growing paperless society, Budden said setting a minimum at an ice cream parlor has become an everyday annoyance.
“It happens at least ten times a day,” she said. “They try to charge it and they give you this indignant look like, how dare you not take daddy’s credit card.”
But if a business does, indeed, refuse to accept daddy’s credit card, you can report it.
If notified of a business that sets a credit card minimum, MasterCard works with the merchant’s bank to force them back into compliance, first by sending a letter reporting the rule violation.
“I think that the vast majority of cases just takes a letter,” said Jordan, the MasterCard spokesman. “But there are other things that we can do.”
Ultimately, they can terminate a merchant’s ability to accept MasterCard, but Jordan said it “rarely comes to that.”
After solving her credit card issues, and finally acquiring what she had been desperately craving, Grimm flirted with the possibility of reporting Stucchi’s to the credit card companies.
“I was 21 cents short of five dollars,” Grimm said in disgust. “Yeah that’s kind of ridiculous.”
But at least she got her smoothie.

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