One question we often receive is about the ability of food truck owners setting minimum credit card charges for their customers. Today we will dig in and provide the answers. To start off, we’ll get to the heart of the debate.
Until 2010, credit card brands didn’t allow minimum credit card charges. The change of heart can be attributed to Uncle Sam, or more specifically, Illinois Senator Dick Durbin.
Setting Minimum Credit Card Charges for Your Food Truck
Thanks to the Durbin Amendment to the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Federal Reserve now has the power to regulate the maximum/minimum purchase amount for credit card purchases. This limit is currently set at $10 or less.
The portion of the Durbin Amendment pertaining to minimum purchase amounts on credit card transactions reads as follows:
“(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.–A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.”
Prior to this legislation, minimum purchase amounts on credit card transactions weren’t exactly in the credit card company’s best interests. So, until the Durbin Amendment came along, minimum purchase amounts were against the processing agreements of all of the major card brands.
Understanding The Old Rules
Here’s what the credit card brands used to say about minimum credit card charges:
“Always honor valid cards in your acceptance category, regardless of the dollar amount of the purchase. Imposing maximum or minimum dollar amounts in order to accept a Visa card transaction is a violation of the Visa rules.” – Visa
“A Merchant must not require, or indicate that it requires, a minimum or maximum Transaction amount to accept a valid and properly presented Card.” – MasterCard
“You may not require that any Cardholder make a minimum dollar purchase in order to use a Card and you may not limit the maximum amount that a Cardholder may spend when using a Card except when the Issuer has not provided a positive Authorization Response for a Card Transaction.” – Discover
To answer the question now, yes, it is now acceptable for you to set minimum credit card charges. At the same time it is not acceptable for you to set a minimum charge on debit card purchases.
You may set a minimum purchase amount on credit card purchases. The key is to abide by the following stipulations. These are set forth in your processing agreement with Visa, MasterCard and Discover.
What this Means For Food Truck Vendors
Here are the specific details regarding restrictions on minimum credit card charges.
“The minimum purchase amount must not exceed $10 (or other amount as set by law)…” – Visa
“the minimum Transaction amount does not exceed USD 10 (or any higher amount established by the Federal Reserve by regulation) …” – MasterCard
“you may require that a Card Sale or Cash Advance with a Credit Card … involve a minimum dollar amount of up to $10…” – Discover
However, you may not set a minimum purchase amount on debit card transactions.
“The minimum purchase amount does not apply to transactions made with debit cards.” – Visa
“MasterCard does not permit merchants to set a minimum transaction amount to accept MasterCard cards that access a debit account.” – MasterCard
“…you may require that a Card Sale or Cash Advance with a Credit Card (but not a Debit or Prepaid Card) involve a minimum dollar amount of up to $10…” – Discover
We have also receive a few emails from food truck customers that have felt inconvenienced by a food truck that is exercising this now acceptable ability to impose minimums on credit card purchases. While we understand that a minimum purchase can be a little frustrating, try to see things from the vendor’s perspective.
The Bottom Line
Food truck owners often lose money on small credit card transactions after paying their credit card processing fees. Just so you know, there is nowhere to report these merchants. Even if you believe they impose minimum credit card charges since the practice of doing so is now deemed acceptable by all of the major cards.