Debit Card Minimums: Merchant Rules and Rights
Are Minimum-Purchase Requirements Illegal?
Merchants pay fees to process credit and debit card payments, and some retailers set minimum-purchase requirements to avoid paying fees on small transactions. Fee structures often include both a flat rate for each transaction plus a percentage of the amount of the transaction. For example, if a merchant pays 10 cents per transaction plus 3% of the amount of the transaction, that would amount to a 13% fee on a $1 transaction but only a 4% fee on a $10 transaction.
Merchants may be breaking the terms of their agreements with payment-processing providers when they impose minimums.
Several laws went into effect in 2013 governing how merchants deal with customers who pay with plastic. Two major changes took place.
Minimum-purchase requirements for credit cards are allowed, up to $10. Merchants can set minimums for credit card purchases, as a result of a lawsuit merchants won against credit card companies and banks.
Adding surcharges to credit card payments is allowed. Again, this applies to credit cards only. Because merchants pay fees every time you pay with plastic, they’re allowed to pass some, or all, of that fee to you. But some states outlaw the practice—even for credit cards—so it depends where you are.
Credit Cards vs. Debit Cards
For whatever reason, the law does not address debit card transactions from a consumer perspective. The laws did limit how much retailers have to pay when you pay with a debit card, and the costs for accepting debit cards are typically lower than the costs for accepting a credit card, even if you use a debit card but choose a “credit” transaction at checkout.
Some debit cards are more expensive to process than others, such as debit cards issued by small institutions.
Having said that, a merchant's agreement with card processing networks prohibits them from setting a minimum purchase amount for debit card transactions, although some retailers may not realize there's a difference between credit and debit cards, while others just choose not to follow the rules.
A Visa document intended for guiding merchants provides instructions on training staff to spot the differences between debit cards and credit cards and states that:
Minimum purchase amounts cannot be applied to transactions that are processed with a debit card.
Reporting Debit Card Minimum-Purchase Violations
For merchants who break the rules, it’s best to let them know that you think they’re doing something wrong, especially when it comes to a small business—the business owner might not be up to speed on all the laws.
Accepting plastic is almost a necessity, but it’s expensive. Although the fees for accepting a debit card are generally far lower than credit card swipe fees, there’s still a cost. Keep that in mind as you make purchases, and pay with cash or check if you can. It may help your favorite business stay afloat, and help keep prices down for everybody.
But since the merchant isn’t breaking any laws by setting minimum-purchase amounts for debit cards, there’s no reason to report the business to your state’s Attorney General or the Federal Trade Commission. Merchants can set whatever policies they want, as long as they do not break federal or local laws.
Visa. "Visa USA Interchange Reimbursement Fees," Page 7. Accessed March 29, 2020.
Consumer Reports. "10 Answers To Credit Card Questions We Get Asked All The Time." Accessed March 29, 2020.
National Conference of State Legislators. "Credit or Debit Card Interest, Surcharges, and Fees 2013 Legislation." Accessed March 29, 2020.
The Federal Trade Commission. "New Rules on Electronic Payments Lower Costs for Retailers." Accessed March 29, 2020.
National Conference of State Legislatures. "Credit or Debit Card Surcharges Statutes." Accessed March 29, 2020.
Visa. "Minimum Transaction Amount on a Visa Credit Card." Accessed March 29, 2020.