Can a business refuse to take credit cards from some customers, but take them from others?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Nov 18, 2021

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A credit card is not legal tender—it is merely one of many convenient ways of paying a debt. Just because a merchant accepts credit cards for payment of debts does not mean that they are compelled by law to do so.

Although there might be other reasons, one reason for refusing credit cards, particularly as payment for services, is when the merchant has gotten the impression that a customer may not be satisfied with their purchase and might later dispute the charge with the credit card company.

A merchant is legally entitled to demand any form of payment they wish. If they demand cash, this is their right. If they demand payment by way of chickens, or oranges, or gold bullion, this is also their right. If a merchant does not wish to take a chance of accepting a credit card payment and instead require secured payment in the form of a cashier’s check, they can. In addition, they can accept a credit card from one patron and refuse a credit card from another.

It may be the case that a store policy requires a photo ID be presented with a credit card at the time of purchase. If two customers both wish to pay with a credit card, and one has ID while the other does not—it is perfectly within the merchant’s right to refuse the payment from the individual that does not have identification.

Refusing Credit Cards for Small Purchases

I recent years, more and more merchants have been implementing minimum purchase policies for credit cards; and they are well within their rights to do so. Both state and federal law allow for business owners to deny credit cards as payment. Many merchants choose to set a minimum amount for credit cards and if a customer chooses to buy less than this amount, they will have to use cash. This is because credit card companies charge business owners anywhere from 1-3% of purchases; in other words, the merchant has to pay out to the credit card company each time a customer uses a credit card (these figures vary for each credit card company), so if a merchant decides that paying out for small purchases does not yield them enough profit due to having to pay the credit card company each time, they may can include a minimum credit card policy.

Merchants do have the option, however, of merely increasing their prices in order to make up for lost revenue for paying credit card companies. So in the end, it may be better to purchase items at a store that has a minimum credit card policy and buy a few more items, than to purchase a few items with cash at an establishment that has increased prices but has no minimum policy.

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