Credit Card Minimum Purchase Law? (Updated 2015)

Q: I would like to report this store in my town for violating the law about minimum purchase amounts. How do I do this? What they’re doing is illegal, right?

A: This topic has been brought quite a few times on Credit Card Forum. There has been a lot of misinformation out there about this and now that the Dodd-Frank Wall Street Reform and Consumer Protection Act in effect, there is even more confusion about minimum purchases for credit cards.

As of 2015, the law allows merchants to set “up to” a $10 minimum, as long as they treat all cards the same regardless of brand.

How it used to be…

For starters, there was never a credit card minimum purchase requirement. It was never illegal for a store to set a minimum. However, doing so was blatently against their merchant agreements with Visa, MasterCard, American Express and Discover – all of which said a minimum purchase amount was not allowed.

If a business violated that rule, a customer could call up Visa/MC/Amex/Discover and report them. However in the several years leading up to the reform, they were very lax in enforcing this rule when a complaint was received.

How it is now…

An amendment of the Dodd-Frank reform went into effect in September 2010 that made it legal for businesses to set a credit card minimum purchase amount. Here’s the law so you can see for yourself:

(3) LIMITATION ON RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.  (A) IN GENERAL.—A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability (i) of any person to set a minimum dollar value for the acceptance by that person of credit cards, to the extent that (I) such minimum dollar value does not differentiate between issuers or between payment card networks; and (II) such minimum dollar value does not exceed $10.00

This might be beneficial for small businesses that were sick of processing fees, but for us the consumers, the drawback is that now we can’t always use our credit cards for small purchases. However don’t panic – the law has been in effect a while now and I have yet to encounter any changes. For example, the dry cleaners down the street from me still has their sign on the counter stipulating a minimum amount for credit card transactions, the only difference now I guess is that they aren’t breaking the rules by doing it. I have yet to come across any new businesses implementing minimum purchase amounts.

I see big businesses encourage credit cards for small purchases
Small businesses often complain about the processing fees, but if they were smart, they would realize it’s sometimes worth the cost. Why? Because those customers paying with credit cards are likely to spend considerably more than they would with cash, certainly more than enough extra to offset the swipe fee, anyway.

For example, when McDonald’s started allowing credit card payments, they found that the average purchase size increased from $4.50 to $7.00 (source: NPR). A broad study across multiple industries conducted by Dunn & Bradstreet found that purchase sizes were 12% to 18% more when paid for with credit card. This is why all the major fast food joints actually encourage and promote credit card payments.

If the cost of goods is low (i.e. convenience store cup of coffee) and it was my business, I would rather take the hit on the fees if it meant selling an extra-large $1.99 coffee instead of the $1.29 size. That’s just my two cents, anyway.

Conclusion?
A credit card minimum purchase requirement of $10 or lower is allowed now, so make sure you keep some cash in your pocket just in-case. And I regularly run into merchants in Southern California who try and impose a higher threshold (like $15 or $20) and when I explain to them it’s not allowed, of course the employee doesn’t seem to know or care what I say. It can be frustrating!
Written or last updated August 31, 2015

 
Comments
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Walking home from school I tried to purchase 2 Powerades, they told me there was a 3 dollar minium so I could not. Same store, different man, I went in he allowed me to purchase but charged me tax.

Many years ago, I went into a Federal bank where I had an account and cashed some Government defense bonds.
The cash amount was large and the bank employee ask if I would accept a bank check for the amount. I agreed to and when the check was handed to me I noticed that it was short by two dollars. They stated that it was for issuing the check. I said in that case give me the cash. They then withdrew the fee and handed me the two dollars. I then withdrew all the money in my accounts and walked across the street and opened accounts in another bank.
The banks have run the checking fees into the ground, ruining the purpose of using checks and they are doing the same for credit cards.

Why should I pay for you to use credit cards. I pay the fee not the customer. You want to use a card you should pay a fee. I make $.25 on a certain product and having a $10 minimum I don’t make any money off of your purchase. I try to save my customers money by not raising the price on that item.

Most people buy more, but for the people who want charge under 10, as a small business owner of 30 years, I say don’t let the door hit where the God Lord split you. You are probably a pain in the ass to deal with on everything and that’s one nice way of getting rid of the jerks. Under 10 says can cost us up to 25% and it cost me over 7k dollars in one year. Bye Bye

I tell stores that have this policy that I disagree with it and I wont shop there anymore. So now they’ve really lost money.

On debit cards no they cannot, the law only speaks about credit cards. Debit cards are not included.
http://www.creditcards.com/credit-card-news/merchant-minimum_purchase-credit-debit-1585.php

I was just at a store today and my item was $7 , the person pointed put to me that purchases under $25 will be charged $1 for using a Credit Card, and charged the 4% fee that the Retailer is being charged for the privilege of accepting credit cards! Is this legal?????

If the law states that they cant differ between cards or issuers then how can they differ between EBT or any other assistance legally….the law says no exceptions.

What about a full service restaurant that has a credit card minimum charge of THIRTY DOLLARS ($30.00)? Who can I report them to? My Visa card carrier?

The truth is this minimum purchase should BE Illegal! Let’s take an example of someone that’s low on cash before their paycheck of the week and they live in a rural area. Their local gas station has the $10.00 dollar minimum and the customer has to get their child to the hospital or fuel for the generator that powers the heat for a heater that is positioned in a room with a new-born baby. I understand that’s an extreme scenario but it happens. As far as I know they do not have a minimum for EBT (food stamps or cash assistance), and that operation is now being handled by Chase Bank which handles more credit transactions than most banks and even TCU (Teacher’s Credit Union). Instant transfer should be as it is described… Instant! Declined or accepted at the approval stage. Merchants should have observed the fees they were agreeing to before they entered into a contract with the electronic funds transfer company they decided on to use or enter into contract with. NO excuses, it is a big mess but don’t ever force a customer to buy something they don’t need and set a standard for a fee you are obligated to?
Merchants and customers need to object to these unfair transaction rates, but merchants should not uphold the unfair minimum rates. This just empowers the large credit companies and banks.

We own a small shop that sells boardgames, and we also sell soda so that our customers don’t need to get up and go get it somewhere eles and then come back with thier soda. We also want to provide some cheap items that can satisfy them while in our shop but…it costs us around 75 cents per card transaction and if we payed 53 cents for the product and charge 75 cents for it and hope that customers only use cash we might make a small profit but if they use thier card to buy on soda it cost us 53 cents to get the soda we sold it for 75 cents (so that is 25 cents into our bank acount) but then we have to pay the card processing fee of 75 cents we just lost the 25 cent profit and went into the red 50 cents. if 10 people did that a day for a week we would loose $3.50 cents a week and then that turns into $168.00/ year I know it doesn’t sound like much but to a small store for every two sodas we sell we can buy one more but with the fees we have to sell a lot more inorder to replenish the soda we bought and that doesn’t even account for what needs to be attributed to lease of the building, electricty, heating, city utilities, and employee expenses. SO for you who made the comment on lazy accounting that is not it, a buisiness can simply not stay afloat if they just give away small purchases and eat the 168.00 a year. But there are other way around that problem too. if it is a frequent customer that always buys the “2 dollar book” they could purchase a “Book card” or for us we sell drink cards that have 10 spots on them and you pay for nine drinks and get the tenth one free that way we only pay the card fee once and that customer gets a free dink we still get our profit and they are happier. I just have to figure out how to come up with something like that for the otter pops that sell for 25 cents if someone buys only one with a card I am up crick with out a paddle.

If the guy who buys a pop that you lose 0.50 on then goes on to make a game purchase or rent table space at your store that makes you $25, wouldn’t it make sense then to eat the $0.50 as a cost of keeping your customers happy?

I know my reply comes years later Rex, but thank you. I agree with you that considering how much money the business will make overall by accepting plastic, it most likely will be greater than what they lose in transaction fees. It burns me to a crisp every time I shop and run into those annoying minimum purchase requirements the store OWNERS set just to pass more fees on to me, the customer. I will keep a $20 tucked away in my wallet from now on to cover very small purchases.

Why don’t small businesses that sell side items, like this board games shop, simply use a phone reader, like Square or PayAnywhere, for small items like that? Then they don’t have to pay the high fees of a terminal, they keep more money, they don’t have to turn anyone away, and they are seen as someone who is trying to work with a customer instead of trying to (in the customer’s eyes) make more money.
I use both plug-ins on a regular basis for small things that aren’t worth the higher terminal rates, and pay less than 4% of the purchase price, with no fees. It still goes to the same account, uses the same tax ID number, and is legal-to say that the store pays $0.75 on a $0.75 transaction means that some serious rethinking should be going on regarding terminal costs- there are so many options; I think that the rates the store is being charged are too high for their monthly card charges.

I get that merchants can require a minimum for using a credit card (do not agree with it however).

But… can they charge a transaction fee for processing it for less than the minimum? I ordered take out at a restaurant across the street where I live. My order was $7.50…and they charged me $0.75 to use my credit card. A 10% fee?!?!?

I’ve heard that states can impose their own restrictions on what minimums are allowed. For example, California does not allow any business to set minimum amounts for credit card purchases. Is this true? Where can I find a list of civil regulations by state? I am a full-time student at an urban campus in a major metropolitan area. I absolutely HATE using cash and carrying it around. I just don’t feel safe, especially when someone will shoot you over $10. At least by using my debit card for purchases, I don’t have to worry about keeping it hidden or losing it. Buying from cash only businesses who force you to use their atm which usually also charges an annoying fee is a big annoyance and a hassle for those in my position. I would rather walk to the next corner and buy from a place that allows me to be free from cash than burden myself with a businesses cash/credit/debit card policies. I also read that businesses are allowed to charge a fee to use a credit card as long as it doesn’t exceed what they are liable to pay the card issuer for the transaction. This is much more desirable a situation for me than to buy a bunch of items I don’t want or bother with an atm. More businesses need to focus on the bigger picture and the happiness of their patrons over their own accounting laziness.

My parents lease a small restaurant in Ca. A few days ago i had a customer who was extremely upset because of a sign we had about a $10 minimum on cards he even threw a five dollar bill at me. I was shocked to see some one so upset to have pay four bucks cash. To me that guy wad rude and childish. I would feel embarrased to throw a $4 dollar fit anywhere.

Don’t be confused. The law (3) above, in effect:

1. ALLOWS merchants to create minimum credit-card purchase limits (up to $10)
2. ALLOWS merchants to set minimums (of any amount) for debit-cards.

@carol and ken, the minimum purchase amount ONLY applies to CREDIT card purchases and NOT DEBIT card purchases as further explained by VISA:

http://usa.visa.com/about_visa/ask_visa/index.html

I own a used bookstore in a small town that accepts credit/debit cards. Merchant processing fees are a cost of doing business and we recognize that cards are convenient for many of our customers, especially travelers.

However, it is incredibly frustrating to deal with certain customers who only ever buy one $2 book at a time, multiple times per week, and use their plastic every time. For years we resisted saying anything, but about six months ago we finally put up a sign asking customers to help us keep our prices low by refraining from using a card on purchases under $10.

Many customers don’t realize that merchants pay a flat fee, a transaction fee, a monthly fee, and additional fees for rewards cards, every time we swipe a card. Almost every customer that we’ve explained this to, understands where we’re coming from.

In six months we’ve had one person who left without making a purchase because we asked them if they had another form of payment. I think if you enjoy shopping in a store and they ask you to work with them on payment method, why wouldn’t you? Is it that big of an inconvenience to carry $10 bucks in your pocket?

It seems to me if you’re that upset about having to use cash, there’s gotta be something else that’s bothering you. Why take it out on the shops that work hard to provide service, selection and value. I promise you, most mom & pop shops aren’t laughing all the way to the bank…

I don’t get upset, I just take my business elsewhere. Pretty idiotic of someone to set a minimum purchase when there’s multiple other places in the same area (as well as the Internet) that don’t. It’s like you’re trying to alienate customers and give them incentive to shop elsewhere. If any bookstore tried to tell me that, I’d just get it on Amazon, no offense.

I read the text of the bill, and it mentions ‘credit cards’ but, differentiates between credit and debit cards. I didn’t see anything that says they can set a minimum purchase amount for debit cards.

Please advise.

Ken

That’s my question, too. Can they impose a minimum purchase for a debit card purchase? I’ve been trying to find the answer to this for a while now.