What Is A Monthly Minimum For Merchant Accounts?

If you want to accept credit cards, your merchant service provider will likely have a list of fees and rules that can feel pretty overwhelming. One fee that confuses new business owners is the monthly minimum.

It’s not actually an extra fee — it’s the minimum amount in processing fees your provider expects each month. If your fees fall short, you pay the difference. If you meet or exceed it, you don’t owe anything extra. In this article, we’ll break down how monthly minimums work, why they matter, and how you can avoid them.

Why Providers Charge A Monthly Minimum

Merchant services is a competitive business, and providers are always trying to advertise the lowest rates. To make sure they don’t lose money on low-volume accounts, some providers include a monthly minimum requirement. This guarantees the provider makes a certain amount of revenue from your account every month, even if your sales are slow.

The good news? Many of the best merchant account providers don’t bother with monthly minimums anymore.

How Monthly Minimums Are Calculated

Here’s how a monthly minimum works: if your processing fees don’t hit the required amount, you pay the difference. If your fees are higher, you’re in the clear — no extra charge. You’d only pay the full minimum if you didn’t process any transactions at all.

Most providers that still use monthly minimums set them around $25/month. The catch is that only the processor’s markup usually counts toward it. Interchange fees (the part that goes to banks and card networks) don’t count, even though you’re still paying them.

Let’s look at an example. Say you’re on an interchange-plus plan with a rate of interchange + 0.30% + $0.10 per transaction. If your average ticket is $100 and average interchange is 1.9%, you’re paying about $2.30 per transaction. But only $0.40 of that counts toward your monthly minimum. At that rate, you’d need to process $6,250 in sales per month just to break even on your minimum.

Larger businesses won’t notice this, but for small, new, or seasonal merchants, it can become an unnecessary cost. If you’re seasonal, ask your provider upfront if they’ll waive the minimum during downtime.

How Monthly Minimums Affect Your Business

Here’s how monthly minimums affect businesses:

• Small businesses feel the pinch most; larger businesses usually process enough to avoid it.
• Monthly minimums don’t benefit merchants directly — they just protect the provider.
• Some providers use monthly minimums to offset lower advertised processing rates.
• Many providers are phasing them out, but they’re still common in high-risk accounts.

Always check your merchant agreement so you know if a minimum applies.

Alternatives For Low-Volume Merchants

If you’re a small or new business, a payment service provider (PSP) like Square can help you avoid monthly minimums. You pay only when you process payments, with no contracts or monthly fees. Rates are higher — especially for debit — but the flexibility often outweighs the cost for seasonal or low-volume businesses.

PSPs can also close accounts quickly if fraud is suspected. To stay safe, check out our tips for avoiding account holds, freezes, and terminations.

Another choice is a full-service merchant account with no monthly minimums. Providers like Dharma Merchant Services and Helcim offer transparent interchange-plus pricing. For businesses with steady, higher-volume sales, this can be cheaper than a flat-rate PSP.

How To Avoid Monthly Minimums

If your processing volume isn’t high enough to benefit from lower rates, it’s best to avoid contracts with a monthly minimum. Check for this requirement when setting up your account and negotiate to reduce or remove it if necessary. Our guide on negotiating credit card processing fees can help.

Flat-rate and tiered plans can make it hard to know exactly how your monthly minimum is calculated, blending interchange fees and processor markup.

The simplest way to avoid it is to choose a provider that doesn’t charge a monthly minimum at all. Most of our top-rated processors for small businesses have none (except some high-risk accounts). By choosing a processor with no monthly minimum, you can keep more of your hard-earned money and focus on growing your business, not worrying about hidden fees.