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Is it legal to set minimum card payment limits?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedJan 20203 min read

The UK is well on its way to becoming a cashless society. Customers and businesses are taking an increasingly card-only approach to retail payments, and in 2017, debit card transactions overtook their cash equivalents. The law is changing along with our financial habits, with the card surcharge ban of 2018 removing any extra charges – and hesitation – customers may have faced when paying by credit or debit card. However, one obstacle remains: the minimum card spend.

What are minimum card payments?

Minimum card payments, or minimum card spend, is the lowest amount a customer can spend before a retailer will accept a debit or credit card payment. In most cases, you’ll experience minimum card payment in shops that are independently run, such as corner shops or cafes. Generally, the limit will be set at around £5, but it can run as high as £20 in pubs and restaurants.

What is the minimum card payment law?

There is no minimum card payment law, which means that there’s nothing stopping businesses from setting a minimum spending limit. However, there are rules set out by card networks which state that any merchant accepting their cards cannot set a maximum or minimum limit. Setting a minimum spend on card payments is a violation of these rules and can result in a hefty fee or account suspension. Having said that, these rules are rarely enforced and merchants do not distinguish by card network when outlining their minimum spend for card payments.

Visa’s Core Rules for European merchants state the following:

A Merchant must not establish a minimum or maximum Transaction amount as a condition for honoring a Visa Card or Visa Electron Card.

Mastercard Rules also prohibit merchants from setting this charge:

A Merchant must not require, or indicate that it requires, a minimum or maximum Transaction amount to accept a valid and properly presented Mastercard or Maestro Card.

It’s not just card networks that clearly state that merchants should not be asking customers to spend a certain amount for card payments. Card reader companies are similarly bound to the Card Scheme rules of any card network they are designed to accept. If your card reader provider discovers that a business has been breaking these rules, they can suspend its account.

SumUp defers to the Card Schemes of accepted networks in their terms and conditions:

By accepting these terms you also agree to the network rules (“Network Rules”) as set forth by the credit card organizations including, but not limited to Visa, Mastercard and American Express (together, “Card Schemes”).

In short, there may not be a law against setting a minimum spend on card, but by placing a minimum card payment limit on transactions, merchants run the risk of being fined or suspended by their service providers.

Why do businesses set a minimum card payment?

One of the most common reasons for implementing a minimum spend on card is to avoid paying processing fees. However, this is based on faulty logic. Processing fees vary from provider to provider and while some have fixed rates – say, 17p for every transaction (making a significant dent in the margins of a £1 purchase) – many fees are taken as a percentage, so every charge is proportionate to the total cost of the sale.

Another simple reason why merchants set a minimum card payment in shops is their desire to cut down on queue time. In a busy retail environment, the extra time taken up by Chip & PIN payments may be viewed as out of proportion to smaller fees that don’t reach the minimum spend on card limit. However, compared to taking cash and counting change, the additional time caused by card payments is relatively minor, and upgrading to a more streamlined POS may be a much more effective way of speeding up the payment process.

Losing customers

Sending a customer away in search for cash is unlikely to be fruitful, with ATMs continuing to disappear from the high street. In any case, they’re much more likely to find a competitor than a cashpoint. There are, of course, customers who are willing to support their local businesses, but even the best of intentions may be swayed by convenience and an empty wallet. Once a customer knows that you don’t want their money below a certain amount, it may deter them from coming back, and valuable repeat customers are well worth the small processing fee on any sale.

With bank debit powered by GoCardless, minimum card payments won’t be an issue. Find out how we can help you with ad hoc payments or recurring payments.