Credit cards offer unparalleled convenience to consumers, and more people than ever before are using them. According to the U.S. Census Bureau, 70.2% of American households have at least one credit card.
If your business doesn’t accept credit cards, you run the risk of alienating a large portion of potential customers. Still, accepting credit cards means paying the processing fees that accompany each transaction. Typically, the benefits of accepting credit cards are more than worth the price, but many merchants still wonder how to cut costs.
Can your business set a minimum amount on credit card purchases? What about a maximum amount? Legislation and industry regulations can make finding an answer to those questions complicated. Keep reading for our simplified guidelines on what you can, and can’t, do.
Can my business set a minimum amount for credit card purchases?
It is legal to set a minimum purchase amount on credit card transactions, but it’s not legal to charge just any amount. As of 2010, credit card companies must allow their merchants to set minimums of up to $10. It’s completely up to you as the business owner if you would like to set a minimum, and any amount between zero dollars and ten dollars is fair game.
This does not apply to debit cards. Current legislation does not address debit minimums, so the credit card associations all explicitly prohibit the practice in their merchant agreements. It’s important that, if you decide to enforce a minimum amount on credit card purchases, you do not enforce that minimum when processing a debit card.
There’s one more catch. But this one’s easy. Minimum purchase requirements cannot differ by card type. That means you can’t have a minimum of $10 for an American Express card, but no minimum for other cards. If your business decides to enforce a minimum purchase requirement on credit cards, make sure it applies to all credit cards.
Visa’s guidelines offer a multitude of tips for merchants that decide to implement minimum purchase amounts.
Can my business set a maximum amount for credit card purchases?
When it comes to setting a maximum purchase amount, there’s not as much wiggle room. In general, maximum purchase amounts are prohibited. There are only exceptions for very specific types of businesses.
If your business wants to begin implementing a maximum purchase amount, you must be either a government agency or an educational institution. Make sure you give your processor a call to confirm that they have your business categorized correctly, and that nothing else prohibits you from instituting the maximum purchase amount. As with credit cards, maximum purchase requirements for debit card purchases are not allowed.
Final Thoughts
Ultimately, it’s up to you as a business owner to decide whether it makes sense to pass on some of your processing fees to your customers. If you run lots of small transactions, a low minimum could help improve cash flow. But if your average ticket is $4, enforcing a $10 minimum might drive away business.
If you’re thinking about enforcing a minimum purchase amount to cover high fees, it could be that you’re paying too much for processing in the first place.
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