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Old 28 January 2007, 06:25 PM
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callee callee is offline
 
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Default Canadian Interac Fees

I'm not sure if this would count as an UL, so please move it if not, but it is something I heard and I'm wondering if it is true.

So the other day I stop in, on impulse, at the local KFC. It was tuesday, and the sign advertised "twoney tuesday." The "twoney" (or "tooney") is the cdn $2 coin. On twoney tuesday a lot of places will offer a special deal for just a twoney. At KFC is was a meal for one. So I stand in line for 5 minutes, all the while smelling those 7 herbs and spices, salivating all the more for that addictive chicken product. When I order my twoney tuesday special, the girl rings it up for $2.28 (tax you know) and I pull out my interac card.

For those who don't know, the interac card is the cdn debit card system. In america, of course, you can have your "visa check card" (or whatever company) and at the store, if you select debit, they will use the visa network already in place to route the money right out of your bank account, right? Well in canada they do not use the credit card network to do this. Rather, they just set up a second, independent network called the interac system, and you get a special card from your bank just for it. We call it a "bank card" and the only thing it is good for is for swipping at the store's interac terminal and using it to debit the money right out of your account. Or using an ATM of course.

So anyway I pull out my interac card and the girl responds, "no, $5 limit for debit." See, each interac transaction costs a few cents. Some stores will just charge the user for this. That's not very popular, though, so most sores just swallow the fee themselves. If they're going to swallow the fee for the sake of your patronage, though, they want to make sure it's worth their while, so it is very common to see posted policies that there is a minimum $5 purchase in order to use the interac system. Because the store is only willing to swallow the fee if you are going to spend atleast $5.

I was a little miffed at the girl. Sure, it's a common policy to have a $5 min., but there was no posting to that effect at the KFC. Had there been a sign I wouldn't have waited in line for 5 minutes, smelling all that chicken and getting all full of anticipation. I had no cash on me, so the cashier turned me away. She was rather snotty about it, I thought. I left quietly, but I was very annoyed.

When I got home I decided to call the manager and complain. It wasn't just that it was unfair of them to enforce the policy when there was no warning, but also that the girl was so rude about it.

The manager was excellent. She was very friendly, and it wasn't long before I was no longer upset at all. She said she had to check with the district manager to find out the proper procedures for my complaint, so she would call me back.

When she did, she gave a curious explanation. This is the legal fact of which I am doubting the veracity. The urban legend, if you will. She explained that headquarters had informed her that since interac counted as a legal form of payment, they were legally prohibted from refusing it, since, of course, any public business by law has to accept any form of legal tender, she claimed. Thus, she explained, it was illegal to refuse interac payments just because the bill was less than $5. To off set the fees for small, under-$5 purchases they were supposed to charge a $0.25 fee.

This struck me as odd, because: a) The $5 min. purchase policy is very common; could all these people be breaking the law? b) I've never seen anyone explain that they'd have to charge a quarter for interact purchases under $5. c) since when does a business always have to accept all legal forms of payment? What about all those businesses that don't accept personal cheques? What on earth is a "legal" form of payment anyway?

I mean, from a please-the-custmer stand point what she said makes sense. I'd be willing to pay an extra quarter for the convenience of using my debit card for under $5 purchases. But as a "legal rule," it sounds like an old wive's tale.

yeah, sorry I took about 500 more words than really needed to explain this, but any thoughts?
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  #2  
Old 28 January 2007, 06:34 PM
zerocool zerocool is offline
 
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I don't know about interac in particular, but a lot of places here try the '$5 limit' for credit card transactions. It is not illegal, but is forbidden by the various credit card companies, so technically one could complain and the store would have their ability to charge credit cards revoked. Perhaps canadian banking institutions have set up the same conditions on those who wish to use the interac system?
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  #3  
Old 28 January 2007, 06:49 PM
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I can't speak for the Canadian Interac system, but...

In the US, if a store has a system to take certain payment types other than cash, they are bound by contract to take those payments. If someone wants to make a small purchase on a debit card, the store is not "legally" required to take a payment, but they can lose the right to use the credit/debit system if they do refuse. Stores that take debit cards can apply a transaction fee (just like an ATM), but that fee must be disclosed prior to the purchase. Stores that take credit cards are NOT allowed to add extra fees no matter what the transaction size is.

Checks can be refused as long as there is a sign warning that checks are not honored. However if the store has a system such as TeleCheck, the same basic rules as credit card payments apply.
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Old 29 January 2007, 05:02 AM
Amused
 
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Lots of businesses refuse to accept bills over $50 (for example) and while that's illegal too they all do it.
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Old 29 January 2007, 05:30 AM
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Quote:
Originally Posted by Amused View Post
Lots of businesses refuse to accept bills over $50 (for example) and while that's illegal too they all do it.
That practice is considered perfectly legal according to the US Department of the Treasury.
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  #6  
Old 29 January 2007, 03:54 PM
KathyB
 
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From the Interac Web site
Quote:
Surcharges

--A surcharge is a fee charged to cardholders by the Interac Association member responsible for the Automated Banking Machine or the Interac Direct Payment terminal [the merchant rings up the sale and enters the amount into the point-of-sale terminal.]. A merchant cannot surcharge for the use of Interac Direct Payment. The surcharge fee is in addition to any service charges the cardholders may pay their financial institution for using the Interac shared services.

--Interac Association members who provide ABM or Interac Direct Payment services may impose a surcharge to users. If the member applies a surcharge to the transaction, the cardholder must be notified on the screen by a message and the cardholder will be given the opportunity to cancel the transaction without cost.

--Interac Association does not set or regulate the amount of these surcharges. Interac Association rules, however, require that cardholders be informed of the surcharge on the screen at an ABM or on the PINpad, and be given the option of canceling the transaction without cost after being informed of the fee.
It is rather hard to figure out, but I think it means that the merchant (in this case, the KFC place) cannot surcharge. "Members" are not the merchants, but are rather the companies that supply the terminals and run the system. "Each card issuing member [e.g. your bank] and terminal operator may set fees or service charges for using Interac services. These fees may relate to the cost of accessing your account, processing the transaction, and installing and maintaining the terminal." They can have surcharges which are assessed when you use the card to buy something,
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  #7  
Old 29 January 2007, 04:17 PM
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Quote:
Originally Posted by Amused View Post
Lots of businesses refuse to accept bills over $50 (for example) and while that's illegal too they all do it.
Quote:
Originally Posted by TrekkerScout View Post
That practice is considered perfectly legal according to the US Department of the Treasury.
According to the RCMP, it's legal in Canada, too. Just because a currency is legal, doesn't make it mandatory.
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  #8  
Old 29 January 2007, 04:46 PM
Amused
 
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You know I was going to look it up but I thought I had heard recently from a good source that it was illegal, that'll teach me!
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  #9  
Old 29 January 2007, 08:55 PM
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I know that our tobacco store here charges a 0.35 fee for anything under $10.00 are you saying that this is an illegal charge on their part? If so boy have I been getting ripped off.
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  #10  
Old 30 January 2007, 04:43 AM
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Quote:
Originally Posted by Diehard View Post
I know that our tobacco store here charges a 0.35 fee for anything under $10.00 are you saying that this is an illegal charge on their part? If so boy have I been getting ripped off.
It is not "illegal" for the store to charge a transaction fee, but it is most certainly a violation of their contract with the credit card companies. Many store that charge transaction fees for credit card purchases do so knowing that the general public is unaware of the terms of their contract. I would report their actions to the credit card company.
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  #11  
Old 31 January 2007, 04:45 AM
JD65
 
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Darn, most people beat me to it...but the merchant agreements I've seen do state that they are not allowed to surcharge OR have a minimum purchase required. Of course, lots of stores charge 50 cents or so on ANY purchase, which I suppose is better than the $2.50 the local bars charge to take money out of their ATM, plus the fees my bank charges for not using my bank's machine. Soooo, like $5 for a $20 withdrawal if you're caught between having forgotten you cash at home, or leaving the credit cards at home.
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Old 18 February 2007, 01:46 AM
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A bit late but my snippet.

My economics teacher in college had told the class the debit payments aren't considered another form form a cash from the economic point of view. I may have this a bit off since it's been a few years and it wasn't the most exciting class though.

When I've purchased something under $5.00 at KFC the girl at the counter mentioned their would be an additional charge for such a low purchase. She seem genuinely seemed apologetic about it though. I always ask if there is a debit charge for small purchases now.
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Old 18 February 2007, 04:59 AM
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Quote:
Originally Posted by TrekkerScout View Post
I Stores that take debit cards can apply a transaction fee (just like an ATM), but that fee must be disclosed prior to the purchase. Stores that take credit cards are NOT allowed to add extra fees no matter what the transaction size is.
Are you sure about that? One of our vendors charges us 3% of the total supply amount if we pay for our order with our Visa check card.
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  #14  
Old 18 February 2007, 06:41 PM
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Quote:
Originally Posted by justusfour View Post
Are you sure about that? One of our vendors charges us 3% of the total supply amount if we pay for our order with our Visa check card.
A Visa Check Card is classed as a debit card, not a credit card (even though it uses the Visa Credit Card system for approval). Because it is a debit card, the vendor is allowed to add transaction fees at whatever amount they so choose (just as long as they notify you prior to finalizing the transaction).

The terminology of cards can be a bit confusing. Here is a list as to the card type based on what is written on the face of the card:
ATM = debit
Bank = credit
Cash = debit
Check = debit
Credit = credit
Debit = debit
None of the above = credit

If a vendor is charging a transaction fee for taking a credit card, then they are most likely in violation of their contract. However, I should note that this only applies to retail sales. Wholesale and merchant accounts are handled differently and may be assessed a transaction fee on any type of purchase.
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  #15  
Old 18 February 2007, 07:00 PM
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Quote:
Originally Posted by TrekkerScout View Post

If a vendor is charging a transaction fee for taking a credit card, then they are most likely in violation of their contract. However, I should note that this only applies to retail sales. Wholesale and merchant accounts are handled differently and may be assessed a transaction fee on any type of purchase.
That's probably the major difference in this case, Trekker, since our vendors are wholesale. Couldn't think that far about it last night!
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  #16  
Old 19 February 2007, 01:18 AM
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My local convenience store has a sign that it won't take Interac for lottery tickets, milk, or cigarettes. Many stores have a $5 or even $20 limit for non-cash payment, and there's a lot of places which won't accept $50 and $100 bills even with ID.

My favorite computer store in town advertises clearly that all of their prices are discounted by 2%, and this premium will be charged for "non-cash" purchase methods. "Non-cash" methods, according to them, included credit cards and purchase orders, and non-certified cheques. This isn't illegal, and because they are so up front about it, there's no reason for anyone to complain.

To me, it seems "fair" that a retailer recovers the cost of the payment transaction, especially when it is a significant part of the value of the transaction. The computer store is not making a false advertising claim - but because of the stiff competition in their market segment, I can see that they do everything that they can. On the average new computer system they sell - at roughly $1000 - that's $20. I don't think it would make or break most sales.
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  #17  
Old 06 April 2007, 12:03 PM
webworm98
 
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Quote:
Originally Posted by TrekkerScout View Post
A Visa Check Card is classed as a debit card, not a credit card (even though it uses the Visa Credit Card system for approval). Because it is a debit card, the vendor is allowed to add transaction fees at whatever amount they so choose (just as long as they notify you prior to finalizing the transaction).

The terminology of cards can be a bit confusing. Here is a list as to the card type based on what is written on the face of the card:
ATM = debit
Bank = credit
Cash = debit
Check = debit
Credit = credit
Debit = debit
None of the above = credit

If a vendor is charging a transaction fee for taking a credit card, then they are most likely in violation of their contract. However, I should note that this only applies to retail sales. Wholesale and merchant accounts are handled differently and may be assessed a transaction fee on any type of purchase.
Just for info US Visa/Mastercard debit cards they cannot charge you a fee if the card is ran through as a signature transaction. Just like they can not ask you for id even through some merchants do both. However, if the card is ran as a pin transaction then the merchant can charge you a pin fee as long as it does not go through Visa interlink,Visa Plus, Cirrus or the Maestro network.

It is not illegal to set minimum or maximum purchase, charge a fee or ask to for ID but it is against MasterCard and Visa policies. I did read somewhere else that Visa changed the ID policy but I am not sure if that is a fact.

Also, there is a law in California that allows merchants to ask for ID. The interpretation of this law is in debate.
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