Business Idea Contract Enforcement

**cwish001** · 07-13-2009 09:05 PM

I have a business idea or it might be more of a rant but here it is.

I like to use my debit card for everything because I always run out of cash. The problem is all of these stupid cash stations and mom and pop stores around here have $3,$5, even $6 limits on the debit cards. You cant just stop in and buy a soda or water you have to buy other stuff to make it to limit. Turns out this is against the merchant agreements that they all signed. You HAVE to accept all amounts where this is $100 or 1 cent it doesn't matter if you lose money or not! How much do the merchant processors and card issuers like visa and mastercard lose by store policies that violates these contracts. Millions ?? I am going to form a company called "Tattlers" in which the company will have agents that report on practices that are in violation of contracts and receive a flat fee per report or a % of a fine. It seems like this would be a really easy company to form with low overhead and would be in demand because all these companies want to improve their bottom lines. What do you have to lose you only have to pay me a fee if you are charging a fine or making a company follow the your contract which results in higher revenues in the end. What do you think?

**noob** · 07-13-2009 09:25 PM

There is two flaws with your analysis. First, no business under any circumstances have to accept credit payments including debits even if they own a merchant account. Regardless of what the merchant contract dictates, it can not control what any businesses choose to accept as payment methods even if the business have an active merchant account. The second is every business has the right to refuse business for any reason. For these two reasons alone, it warrants enough that no company has to accept payment if they wish not to.

You can certainly petition and try to sue, but you can do that for practically anything these days. There is no ground or warrant on a merchant processor that can enforce how a business choose to operate even if the merchant contract dictates that it is willing to accept payments of a penny or more. That has nothing to do with the business practice itself.

**cwish001** · 07-14-2009 01:01 AM

Noob,

If you sign a contract you are bound by it. Sure you can refuse not to take credit or debit cards but if you do then you cannot have merchant processing. If you do not abide by the contract then you are subject to a penalty or the lose of you ability to accept credit/debit cards and resulting the the end of your business if you live in the modern world. Try to think of this from the side of the merchant processors. They make there money based on a percentage of your credit sales. If 25 % of customers are like me and jump into a store to buy a soda with credit then that is expected revenue to the merchant processor. If the store owner enacts a policy to disallow credit/debit sales for under $5 then that is a increase in cash revenue decrease in credit and thus a decrease in revenues of the merchant processor. This isn't a legal issue in that it is against the law. You certainly can refuse service within legal constraints (can't discriminate, ect). This business hinges around the fact of enforcing a contract "merchant processing agreement" and thus generating revenue for a client (the merchant processors, and card issuers ) via fee's they will change for violation and revenue generated by the cessation of the local business's policy which will result in revenue to my business in the form of % of fee charged, finder fee, ect. at the expense of the local business that is violating the contract through there policies. It is a win win situation for everybody in that the customers will get the advantage of using their debit and credit cards for small purchases, the merchant processors and card issuers will see increased revenues, and I bet that the local businesses will generate more revenue and attract more customers even if they sometimes loose margins on the fees.

**jmeijers** · 07-14-2009 09:02 AM

I don't think Visa or MasterCard would be willing to fine the smaller stores for this, it would probably be bad publicity. The bigger companies are probably also not viable for a fine, as they'd just stop offering Visa or MasterCard.

The system is different where I live though, we can pay with debit cards for the smallest amounts.

**Sheraz** · 07-14-2009 10:58 AM

noob you are right at your place, but see there is nothing 100% perfect in any matter ... the best solution of the problem is to the choose the solution among solution by minimize the flaws/errors and maximize the benefit ...