Can a merchant accept some Visa cards but not others?
I recently ate at a restaurant that accepts Visa but has a policy that specifically excludes accepting Costco Visa credit cards. I have never heard of such a thing.
While the Costco Visa credit card does offer a higher cashback rate than most other cards for restaurants, I have always assumed that the cashback would come out of the Visa merchant fee and that Visa’s merchant fee would be the same regardless of card issuer.
- Why would a merchant specifically exclude Visa cards from a specific issuer?
- Is accepting some Visa cards but not others allowed by Visa’s merchant agreement?
(I am asking out of curiosity, not because I have any desire to file a complaint. I am not going to dine at that establishment again.)
The Minneapolis/St. Paul Business Journal had an article related to this recently (which cited a paywalled Wall Street Journal article).
So currently it is a disallowed to accept some Visa cards but not others, but it is the case that not all Visa cards have the same merchant fees.
I used to have a small business that accepted credit cards, and I paid the same fees regardless of what card was used. I got many offers from other credit card clearing houses, and those I read all described their fees as one number, no mention of it being different for different cards. (Some had tiered fees: lower rates the more money you ran through them, but nothing about different rates for different cards.) Of course I only studied the offers from a handful of clearing houses, I can’t say that all or even most operate this way.
So unless the deal this restaurant had was very different from the deals I was offered, it wouldn’t make any difference what rewards were offered, etc. I always assumed that the cost of rewards programs came out of the profits of the bank issuing the card, not from the merchant.
If anyone has accepted credit cards with different terms, I’d be amused to hear about it.
Initially, I thought that sounded like a clear violation of Visa Core Rules and
Visa Product and Service Rules:
However, there is a also this section specific to the US:
Further down, we see:
So, even though the fees are higher for some rewards cards than others, my cursory reading suggests that it is a violation of their merchant agreement to decline one type of Visa Credit while accepting other Visa Credit.
Tackling the question of fees.
Different cards do carry different fees, even if they are on the same network. This causes a number of issues. In Canada, merchants have recently been given the privilege to charge more for premium cards because the fees can be 50-200 basis points higher (2-3% fees as opposed to 1.5-2% for non-premium cards).
Just as a note, I’ve seen merchants advertise it as a discount for debit card users instead of a surcharge for (premium) CC users.