Debit Card Minimums: Illegal or Just Annoying?

Is It Legal for a Merchant to Require a Minimum Purchase for Debit Cards?

markhillary @ flickr

Some merchants require that you spend a minimum amount before paying with a debit card. Are these minimum purchase rules illegal? While certainly annoying, requiring a minimum debit card purchase is not illegal. However, merchants still aren’t supposed to do it – they’re breaking the terms of their agreement with credit card companies if they do.

Confusion About Illegal Practices

There is a lot of confusion out there about whether or not debit card minimums are illegal.

This may be because several laws went into effect in 2013 that govern how merchants deal with customers who pay with plastic.Two major changes took place, but neither of them outlawed minimum purchase requirements with debit cards:

Minimum purchases with credit cards are allowed, up to $10. Merchants can set minimums for credit card purchases if they want to. This is a result of a lawsuit that merchants won against credit card companies and banks. In the past, merchants set these limits “unofficially." The law did not address the issue, but it was a violation of the merchant’s agreement with credit card companies. Now, credit card companies must allow these minimums. The U.S. Government set the limit at $10.

Adding surcharges to credit card payments is also 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 on to you.

However, some states outlaw this practice. For more details, read about credit card surcharges.

Credit Cards vs. Debit Cards

What’s the difference between how these types of cards are handled? 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 their costs for accepting debit cards are generally lower than the costs of accepting a credit card.

This is true even if you as the buyer use a debit card but choose a “credit” transaction.

So are merchants allowed to do whatever they want when you pay with a debit card? The simple answer is no. A merchant's agreement with card processing networks prohibit them from setting a minimum purchase amount for debit card transactions.

Some retailers may not realize that there's a difference between credit cards and debit cards, and some may just choose not to follow the rules.

Reporting Debit Card Minimum Purchase Violations

What can you do about 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 law; things change quickly, and they’ve got a lot on their plates.

Starting a conversation with your local business owner might be helpful for everybody. You might even feel some sympathy for them – 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 if you can. It may help your favorite business stay afloat, and it will help keep prices down for everybody.

If you believe that a business is blatantly ignoring the rules, you can report them to the card processing networks if you like. However, because it’s not illegal to set minimum purchase amounts for debit cards, you won’t get anywhere if you report the business to your state’s Attorney General or to the Federal Trade Commission