Is it Against the Law to Charge a Minimum on a Credit Card?

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Federal law permits businesses to require a minimum purchase by customers paying with credit cards.
Federal law permits businesses to require a minimum purchase by customers paying with credit cards. (Image: Burke/Triolo Productions/Brand X Pictures/Getty Images)

In 2010, the U.S. federal government enacted legislation making it legal for a vendor to require a customer to make a minimum purchase when paying for products or services with a credit card. Although in direct contrast to the previous industry rules regarding merchant practices enforced by most major credit card companies including MasterCard and Visa, the Dodd-Frank Wall Street Reform and Consumer Protection Act went into effect in July 2010.

Previous Rules

Prior to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, neither MasterCard nor Visa allowed vendors accepting credit cards emblazoned with their logos to require customers to purchase a minimum dollar amount of goods or services in order to pay with their credit cards. Instead, both companies required merchants to accept charges to their cards as payment regardless of the final cost of a sale, provided the final sale equaled 1 cent or more. Failing to comply with the terms of the merchant contract existing between his business and a credit card issuer by enforcing a minimum purchase amount exposed a business owner to punitive action by either MasterCard or Visa, including a fine up to $100,000.

Dodd-Frank

As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, merchants may legally impose a minimum purchase amount when a consumer attempts to pay for an item using a credit card. While the 2010 law specifies $10 as the maximum amount a vendor may require to settle a transaction with a credit card, it allows for possible future increases in the legally permissible required minimum.

Credit Cards vs. Debit Cards

The Dodd-Frank Wall Street Reform and Consumer Protection Act allows businesses to require a minimum purchase only if a customer renders payment via a credit card. The law does not permit businesses to require a customer to purchase a minimum dollar amount of goods or services if she pays with a debit card.

Discounts

In addition to the federal government’s mandates, some states and most merchant agreements forbid a business to charge a customer a fee for using a credit card to pay for an item in addition to the cost of the product. Businesses may, however, offer customers a discount for choosing an alternative method of paying for their wares. Businesses must post the terms of the discounts offered to clients paying with cash or check to remain in compliance with state laws and their Visa or MasterCard merchant agreements.

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