Can You Require a Minimum When You Accept Credit Card Payments?

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A frequently asked question we receive here at Payline is about whether or not merchants are able to impose a minimum credit card payment when they accept credit card payments.

The Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 helped to clear up this minimum credit card payment point of issue for consumers and merchants alike. When President Obama signed this into law, it brought about changes in the American financial regulatory environment that affect nearly all of the nation’s financial services industry.

The minimum purchase standard if you accept credit card transactions at your business allows all merchants to impose a purchase minimum of up to $10. That minimum has to be the same for all credit card brands accepted so that no brand receives any preferential treatment to the issuing bank.

It’s imperative that merchants understand that this regulation does not apply to debit cards, according to the National Retail Federation. Merchants should encourage debit card purchases because it is cheaper than processing credit cards. Debit card fees are capped at 21-cents per transaction, also brought about by the Dodd-Frank Act.

So, the FAQ: should your business impose a minimum credit card payment standard to accept credit card payments?

Our answer: it depends on your business.

If you have repeat customers that have easy access to your competitors, it might be a poor idea to impose an inconvenient charge that could be a turn-off. While it may save you some cash, it won’t be worth the loss of customers if they find a competitor that doesn’t charge a minimum to accept credit card payments. Businesses that focus on volume over long-term customer retention may have success with a minimum purchase rule, however.

It’s true that customers typically do not like minimum purchase rules, but fees can add up. To find out what is best for your business, give minimum purchases a shot and observe your clientele. Like any business decision, the more you know about your customers, the more likely you are to keep them coming back.

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