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.

  1. Why would a merchant specifically exclude Visa cards from a specific issuer?
  2. 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.)

4 thoughts on “Can a merchant accept some Visa cards but not others?

  1. jamesdlin

    The Minneapolis/St. Paul Business Journal had an article related to this recently (which cited a paywalled Wall Street Journal article).

    Large merchants including Target Corp., Inc. and Home Depot Inc. are pushing for the right to reject some rewards credit cards, which typically carry higher fees for merchants, The Wall Street Journal reports.

    The retailers are trying to end the credit-card networks’ “honor all cards” rule, which requires merchants that accept Visa or MasterCard to take all of their credit cards

    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.

  2. Jay

    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.

  3. Hart CO

    Initially, I thought that sounded like a clear violation of Visa Core Rules and
    Visa Product and Service Rules
    : Honoring All Visa Cards
    Visa Merchants may not refuse to accept a Visa product that is properly presented for payment, for
    example, on the basis that the Card is foreign-issued, or co-branded
    with the Merchant’s competitor’s Mark. Merchants may attempt to steer
    customers who initially present a Visa Card to an alternative method
    of payment, such as by providing discounts for cash, but may not do so in a confusing manner that denies consumer choice

    However, there is a also this section specific to the US:

    In the AP Region (Australia), Canada Region, and US Region, a Merchant
    may decline to accept certain categories of Visa products for
    domestically issued Cards. In the Europe Region, a Merchant in the
    European Economic Area (EEA) may decline to accept certain Product

    Further down, we see:

    Limited Acceptance – Europe
    Region and US Region
    In the US Region, a term describing a Merchant’s option to accept one
    category of Visa Cards and not another. Categories consist of both:

    Visa Credit and Business Category
    ● Visa Debit Category

    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.

  4. Lan

    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.

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