Minimum Credit Card Charge & Durbin Amendment

Yes. It is now acceptable for you to set a minimum charge on credit card purchases.

No. It is not acceptable for you to set a minimum charge on debit card purchases.

You can also… lower your credit card processing fees by an average of 40% by getting instant, free quotes from multiple processors here at CardFellow.


You may set a minimum purchase amount on credit card purchases so long as you abide by the following stipulations as set forth in your processing agreement with Visa, MasterCard and Discover.

Check out our debit card charge calculator that shows signature debit and PIN debit charges before and after the Durbin Amendment.


The current regulations

American Express is (and always has been) largely silent on the issue of minimums. However, it’s generally regarded as acceptable to apply the terms set forth by Visa, MasterCard and Discover to American Express.

Here are the finer details regarding minimum charge restrictions on credit card purchases.

The minimum purchase amount must be $10 or less.
As I outline a little farther down, the Federal Reserve now has the power to adjust the minimum purchase amount. So, although it’s currently capped at $10, this can change.

“The minimum purchase amount must not exceed $10 (or other amount as set by law)…” – Visa

“the minimum Transaction amount does not exceed USD 10 (or any higher amount established by the Federal Reserve by regulation) …” – MasterCard

“you may require that a Card Sale or Cash Advance with a Credit Card … involve a minimum dollar amount of up to $10…” – Discover

You may not set a minimum purchase amount on debit card transactions.

“The minimum purchase amount does not apply to transactions made with debit cards.” – Visa

“MasterCard does not permit merchants to set a minimum transaction amount to accept MasterCard cards that access a debit account.” – MasterCard

“…you may require that a Card Sale or Cash Advance with a Credit Card (but not a Debit or Prepaid Card) involve a minimum dollar amount of up to $10…” – Discover

You may not differentiate among card-issuing banks.

In other words, you can’t impose a minimum purchase amount on cards issued by one bank and not another. For example, you can’t impose a minimum on cards issued by Citi Bank when not  imposing a minimum on credit card issued by Bank of America.

“The minimum purchase amount cannot differentiate on the basis of the issuer.” – Visa

“A merchant must not differentiate between MasterCard issuers if it chooses to set a minimum transaction amount.” – MasterCard

“…you may not in any way discriminate among various Issuers of Cards…” – Discover

You may not differentiate among card brands.

In other words, if you choose to set a minimum charge, the minimum must apply to Visa, MasterCard, and Discover equally.

“The minimum purchase amount cannot differentiate on the basis of the payment card network.” – Visa

“the minimum Transaction amount does not differentiate between MasterCard and another acceptance brand…” – MasterCard

“you may not institute or adopt any practice, including any discount or in-kind incentive, that unfavorably discriminates against or provides unequal and unfavorable treatment of any Person who elects to pay using a Card versus any other credit card…” – Discover

Here are the excerpts from the published operating literature of the big three concerning minimum purchase amount for credit cards:

“Merchants may require minimum purchase amounts on credit card transactions.  The minimum purchase amount must not exceed $10 (or other amount as set by law), does not apply to transactions made with debit cards, and cannot differentiate on the basis of the issuer or payment card network.” – Visa

“MasterCard permits any U.S. merchant to set a minimum transaction amount (not to exceed USD 10 or any higher amount established by the Federal Reserve by regulation) to accept MasterCard cards that access a credit account.  MasterCard does not permit merchants to set a minimum transaction amount to accept MasterCard cards that access a debit account.” – MasterCard

“You may not require that any Card Sale or Cash Advance involve a minimum dollar amount before a Cardholder may pay using a Card, except to the extent restrictions on such practice are prohibited by Requirements of Law, and effective upon publication of Release 11.1 of these Operating Regulations, you may require that a Card Sale or Cash Advance with a Credit Card (but not a Debit or Prepaid Card) involve a minimum dollar amount of up to $10, subject to the restrictions in Section 2.4.” – Discover

Why minimum charge amounts are now allowed

Until recently, the card brands didn’t allow minimum charge amounts on credit card transactions — so why the change of heart? You can thank Uncle Sam, or more specifically, Senator Durbin.

Thanks to the Durbin Amendment to the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Federal Reserve now has the power to regulate the maximum/minimum purchase amount for credit card purchases. This limit is currently set at $10 or less.

The portion of the Durbin Amendment pertaining to minimum purchase amounts on credit card transactions reads as follows:

“(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.–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 of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.”

The above text was taken from the Web site of the U.S. Government Printing Office.

How it used to be

As you can imagine, minimum purchase amounts on credit card transactions aren’t exactly in the card brands’ best interests. So, until the Durbin Amendment came along, minimum purchase amounts were against the processing agreements of all four major card brands.

Here’s what the card brands used to say prior to Durbin:

“Always honor valid cards in your acceptance category, regardless of the dollar amount of the purchase. Imposing maximum or minimum dollar amounts in order to accept a Visa card transaction is a violation of the Visa rules.” – Visa

“A Merchant must not require, or indicate that it requires, a minimum or maximum Transaction amount to accept a valid and properly presented Card.” – MasterCard

“You may not require that any Cardholder make a minimum dollar purchase in order to use a Card and you may not limit the maximum amount that a Cardholder may spend when using a Card except when the Issuer has not provided a positive Authorization Response for a Card Transaction.” – Discover

For Consumers

We receive quite a few emails from people that have been inconvenienced by a business that is exercising its now acceptable ability to impose minimums on credit card purchases. I understand that a minimum can be a little frustrating, but try to see things from the merchant’s perspective.

Merchants often lose money on small credit card transactions after paying their credit card processing fees.

There is nowhere (and no need) to report merchants that impose minimum transaction amounts on credit card purchases since the practice of doing so is now deemed acceptable by the major card brands.

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15 Responses to Minimum Credit Card Charge & Durbin Amendment

  1. sarah says:

    Small business owner – what was your loss on bad checks prior to customers using debit/credit transactions at your establishment.
    The fee is small in light of the fact you receive guranteed funds on the biggest majority of your sales today.
    With the increase in debt/credit to the credit card arena has created massive fraud being written off by issuers – business owners should be required to verify who they are doing business with rather than just swiping.

    Sarah

  2. jim says:

    I am a small business owner, and although this “new law” has been established, the public is still not aware of it and very argumentative. I encounter irate customers every day. By the way, a business is charged a fee whether or not it is a debit or credit card!! It is a necessity in today’s world of credit and debit cards to insist on a minimum. Bank fees are excessive. I want to thank Ben and Mary for their understanding. Most of my customers are understanding, but of course, there are always those who will argue with you. Many times a customer will ask what the minimum is before they purchase an item. This avoids any misunderstandings and purchases that a customer will walk out and not take with them because of no “cash”. It is confusing to me to walk around a large city with no cash and just a card. Many establishments still do not take cards – cash only. When you accept credit along with cash it is an accommodation to the customer, therefore, the customer should be more understanding when we set a limit on cards.

    • Ben says:

      Hi Jim,

      You hit the nail on the head — many people aren’t aware of just how much in fees a business pays simply to process a credit or debit card transaction.

      By the way, have you signed up here at CardFellow to get interchange plus quotes from multiple processors? We’ll do our best to help you lower your fees, and our help is free.

    • Jade says:

      Jim,

      I am a consumer. I only encounter this “Minimum Purchase Amount” at eateries in my local area. I have cash in my Checking Account. I have a Debit card to access it. Carrying cash is “old fashioned” to me. I’m finding most merchants ask me to pay at least $5 for my lunch on my debit card or pay cash. They are applying “credit card” minimum payment rules to “debit cards”. My lunch just this week added up to $4.70. They suggested I purchase another bagel. I lost my opportunity for a lunch and the establishment lost $4.70. They also lost much more than my repeat business. I work in an office that has over 500 people working on a daily basis. I spread the word not to frequent this establishment anymore unless you had a party of two or more people because of the $5 minimum rule. Lucky for us there is another establishment one block over that does not have the minimum fee for debit cards. They have good food too!!

      What is your view on this?

      Thanks,
      Jade

  3. Otto Maddox says:

    This is really lame on the part of congress.

    In the San Francisco Bay Area you would see businesses with minimum charges for credit cards (and usually debit) a lot. Usually it was $2 or maybe $5, but if for some reason I was under the minimum, I’d correct the merchant that they were in violation of their agreement with Visa and that they could not have a minimum charge.

    They’d ask surprised.. but I was pretty sure most of them knew exactly what they were doing.

    But that all changed last year. I know the max can be $10, but I haven’t seen that yet. I have had to correct a merchant that had a $5 minimum on debit transactions. He said, “The law changed,” and I had to correct him that it didn’t apply to debit transactions. He wasn’t too happy, but he did run the transaction for me nonetheless.

    • Ben says:

      Hi Otta,

      Thanks for your comment. I can understand your frustration with credit card minimum purchase amounts. I too find myself pulling out cash because of minimums every now and then.

      It doesn’t get to me, though, because I know that businesses set a minimum to avoid losing money on small transactions. Credit card processing fees can really add up, and small transactions are especially expensive.

      The transaction fees that banks and credit card processors charge can be larger than a business’ profit on transactions that are too small. That’s why many businesses have chosen to exercise their right to impose minimums.

  4. Tina says:

    Could you clarify the $10.00 minimum if I use a debit card as a credit card and process with a signature and not a PIN? Does the minimum apply then?

  5. Donna says:

    I recently stopped at a cafe/resturant. I was appalled when a customer gave his debit/credit card to the cashier and was told, they charge a $1.00 fee for debit/credit cards. Is this permitted?

  6. Pete Smith says:

    I encountered this tonight…I will not shop at these merchants and if I make the mistake of entering an establishment….i’ll wait until the transaction is in progress and walk out…

    • Mary says:

      I work as a cashier for a small business, and I’m GLAD of the new law. No more of someone coming in for a small can of pop or a candy bar and want to tie up other people in line (credit card transactions take longer).

      And if you OWNED a business and had to pay the bank fees on the card, you’d agree!

      Lastly, don’t think of it as an inconvenience to you, but a way to keep prices down. Most places have to raise their prices to compensate for all the bank fees.

      PS: banks charge businesses MORE when you use a DEBIT card!!!!!!

      • Ryan says:

        Your last statement is not true. Merchants don’t get charged for processing a Debit Card!!!

        • Ben says:

          Hi Mary & Ryan,

          You’re actually both right. A business with a small average ticket will pay more to process a debit card than it will to process a debit card. The increased cost is a result of the Durbin Amendment’s inadvertent impact on small tickets.

          The Durbin Amendment’s cap on debit fees did lower interchange costs on debit card transactions relative to credit card transactions for businesses with an average or above average ticket size.

        • Small Business owner says:

          Banks absolutely charge you more for Debit card transactions. There are over 700 different types of credit and debit cards with MC and Visa logos. Merchants can end up paying a different fee for each type. Almost all debit cards have higher transaction fee then CC’s do.

          • Ben says:

            Hi Small Business Owner,

            It’s important to understand that interchange fees for both credit and debit cards consist of a percentage and a per item fee. Credit interchange fees have a predominantly higher percentage but a lower per item fee than debit card interchange fees. This is true even for Durbin exempt interchange.

            So, to cost of a credit versus debit transaction will depend on a business’s average ticket. Businesses with lower average tickets will pay a higher fee to accept a debit card due to the higher interchange per item fee associated with debit interchange. However, businesses with higher average tickets will pay less to accept a debit card due to lower debit percentage charges at interchange.

            You’re correct in that there are over 400 different interchange categories among Visa, MasterCard and Discover, but many categories are not widely applicable. Many only pertain to certain industries, or to businesses that process transactions using enhanced data.

            With that said, it is actually in a business’s best interest to pay as close to interchange fees as possible. Doing so will lower overall processing expense. This is something that explained in detail in CardFellow free guide: Credit Card Processing [Exposed].

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