Can You Set A Minimum Purchase Amount For Credit & Debit Card Payments?

Businesses may set a minimum purchase amount for credit card transactions, but federal law and card-network rules limit how the policy can be applied. This guide explains the rules, potential drawbacks, and alternatives for reducing processing costs.

What Is A Minimum Purchase Amount?

A minimum purchase amount is the lowest transaction value a business will accept by credit card. US merchants may set a minimum of up to $10, subject to federal law and card-network rules.

For example, if you set a minimum purchase amount of $5, your customer would need to purchase at least $5 worth of goods or services if they want to use their credit card.

Is A Minimum Purchase Amount Legal?

Minimum purchase amounts are legal under the Dodd-Frank Act’s Durbin Amendment of 2010. However, there are several legal and contractual limitations to setting a minimum purchase amount.

According to the law and merchant agreements, businesses implementing minimum purchase amounts must not:

• Set a credit card minimum above $10
• Apply the minimum to one card network but not another
• Treat cards differently based on the issuing bank

Minimum Purchase Amount For Debit Cards

Minimum purchase requirements generally can’t be applied to debit card transactions, even when the card carries a Visa or Mastercard logo. Businesses must distinguish between credit and debit payments when enforcing a minimum.

Considerations Before Implementing A Minimum Purchase Amount

In general, you should consider implementing a minimum purchase amount when you begin to rack up high processing costs that cut into profits as a direct result of customers using credit cards on low-cost transactions.

However, just because you can set a minimum purchase amount doesn’t necessarily make it a great idea. Let’s take a look at some pros and cons of minimum purchase amounts.

How To Implement Minimum Purchase Amounts

• Post the minimum clearly at the register or checkout and train employees to explain the policy.
• Train employees to distinguish credit cards from debit cards, including debit cards carrying a Visa or Mastercard logo.
• Finally, make sure that you set your minimum purchase amount as low as possible to reduce the frequency of lost sales and frustrated customers. Under no circumstances should you implement a minimum that exceeds $10.

The Bottom Line On Minimum Purchase Amounts

A credit card minimum can help businesses reduce the impact of processing fees on low-value sales, but it may also frustrate customers or lead to abandoned purchases. Keep any minimum at $10 or less, apply it consistently, and never impose it on debit cards.

Alternatives may include reviewing your pricing plan, negotiating processing rates, offering a compliant cash discount, or accepting lower-cost payment methods such as ACH when appropriate.