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Qtips: The Truth About Credit Card Minimums

Today, we’re trying something a little different. We’re introducing our “Qtips” series – merchant insights packaged into short, easy-to-read summaries! Think of these as mini blogs that you can read on your lunch break, before bed, or even while you’re waiting in line at the grocery store.

Our first topic? Credit card minimums. You see them at coffee shops and boutiques all the time, but is it really legal for businesses to require a minimum purchase amount for card transactions?

Believe it or not, it is – as long as that minimum amount does not exceed $10.

Here’s the real question: is it smart to impose one?

More often than not, it isn’t. Yes, a credit card minimum will increase the amount of cash you receive and decrease the amount you pay the banks in service fees, but remember that fewer people carry cash with them these days. Adding a minimum charge will only give these people reason to leave your business in search of somewhere else to take their card, and trust me, they won’t have trouble finding a more card-friendly business.

Also important: accepting cash also has its downsides. You’ll have to make multiple trips to the bank, and there’s a higher chance you’ll encounter errors because your employees are the ones counting the cash at day’s end.

There are some situations where credit card minimums do work, but they’re rare. These include:

  • Businesses with extremely high demand/field a high volume of customers daily
  • Businesses that frequently reinvest hard cash
  • Businesses that service customers that almost exclusively pay in cash

Our advice? Make it a top priority to secure affordable payment processing! That way, you’ll be able to accept credit cards without having to overcharge your customers to make up money lost.

We specialize in helping business owners legally accept credit cards while slashing their overall costs. Click here to request a free merchant statement analysis so we can help you do the same!