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I don't really think the guy is trying to rip off customers. I've had similar situation in the past, I had a quick chat with the manager and he told me that they pay $5 per transaction + 5% (or something along those lines) so that's why they can't really bill credit cards for anything less than $10.
The $5/transactions sounded a little high, but who knows, maybe they are doing cc transactions through some middle-man that is fucking them over.
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