Can You Require a Minimum Purchase for Credit Card Users?

Carla Turchetti by Carla Turchetti on November 5, 2013
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Cash may be king at your small business, but it’s likely that plenty of customers would prefer to pay with plastic.

Accepting credit and debit cards isn’t free: Merchants pay a percentage of the total transaction amount (and often a flat fee per card swipe) to process each customer’s payment. Since you’re losing a portion of every sale that’s paid with a card, can you insist that these customers make a minimum purchase? It depends.

Debit Cards

It isn’t illegal to require a debit card customer to spend a minimum amount, but it does violate user agreements with most credit card-processing companies. Although merchant agreements vary, a small-business owner usually pays less to accept a debit card than a credit card, even if that debit card is run through the register as a credit card sale.

Credit card companies encourage customers to report businesses that require debit card purchase minimums. Violations could nullify your contract with a credit card processor.

Credit Cards

Credit card purchases however may be subject to a minimum spending requirement. A federal law passed in 2010 gives merchants the right to require customers to spend a minimum amount up to $10 when paying with a credit card.

The caveat: The retailer must treat each type of card the same way. For example, you may not require a $5 minimum for Visa customers and a $7 minimum MasterCard users.

Court Fees

Disagreements over credit and debit card fees continue to be contentious. In July, a federal judge ruled that the U.S. Federal Reserve Board had been allowing banks and credit card companies to charge merchants too much to process debit card transactions. That ruling now caps the swipe fee on a debit card at 21 cents, but the Federal Reserve plans to file an appeal.

Since January of 2013 merchants have been allowed to impose an extra fee or surcharge on credit card transactions as part of a class-action lawsuit settement. According to the settlement the business has to notify the credit card processor and customers in advance about the surcharge.

California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas have state laws that limit these surcharges.

The surcharge is not permitted on debit credit transactions.

The Bottom Line

Customers rely on the convenience of their credit and debit cards to pay for goods and services. It is up to you, the merchant, to negotiate the best processing deal you can get to reduce the fees lost to each swipe.

If you insist that your credit card customers spend a certain amount up to $10 in a transaction, you are operating within the law. If you ask your debit card customers to meet a minimum, you aren’t doing anything illegal, but you are violating the agreement you made with your credit card processor — and you can be reported and risk losing that business relationship.

Carla Turchetti

Carla Turchetti is a veteran broadcast, print and digital journalist who is passionate about small businesses and the stories behind them. Carla is a small-business columnist at the News & Observer, the regional daily newspaper in Raleigh, North Carolina.

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