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Is It Legal to Have a Minimum Card Spend in Australia?


11.07.2022 Payments

Is It Legal to Have a Minimum Card Spend in Australia?

Thinking about imposing a minimum card spend? Read this first.  

One of the biggest issues small business owners continually face is rising business costs.  Cash flow is critical, and margins are often tight. For these reasons, some store owners choose to set a minimum card spend — discouraging customers from using their cards for purchases under an arbitrary amount.

While it is legal to set minimum credit card purchase limits, doing so can lead to a frustrating experience for customers. In the long run, this can cause you to lose business. Fortunately, there are other ways businesses can facilitate smaller card purchases while keeping costs down. 

In this article, we explore what a minimum purchase amount is and why stores use them, whether you can legally refuse card payments, and alternative ways to keep more money in your business.

What is a minimum purchase amount?

A debit or credit card minimum payment amount is the base transaction value a business will accept for using a cashless payment method when paying for goods or services. 

There is no legal requirement for businesses to accept card payments. As a result, merchants are able to enforce a minimum card spend. There is no limit to what amount you are allowed to set as the minimum. 

While you are within your rights to tell a customer you won’t accept their card payment for smaller purchases, be aware that this can result in loss of business. For example, if a customer purchases a loaf of bread at their local bakery using their tap and go card and faces no problems, they might be a little irritated when the coffee shop next door has a $10 minimum spend. This customer might feel forced into buying extra items they didn’t necessarily need or want in order to meet the payment requirement. Next time they need a caffeine fix, it will probably be sought elsewhere. 

Why do stores have a minimum EFTPOS amount? 

Some merchants decide to set a minimum credit card purchase amount for EFTPOS transactions due to the perceived cost of processing transactions. This is more common in smaller businesses, such as a family-owned coffee shop or local grocery stores, which may have a minimum card spend to avoid incurring a processing fee for a small transaction. 

Can shops refuse card payments? 

It is completely legal for a business to refuse a card payment. However, this can be a frustrating experience for your customers, and one which can alienate them from your business. 

Losing customers due to refusing card payments will likely cost a business more in the long run than the processing fees a merchant services facility charges.

Passing the cost on to the customer 

There are ways small businesses can set minimum purchase amounts and avoid turning customers away at the same time. The easiest way to do this is to pass the cost of the transaction on to your customer via a surcharge.

For example, a shop that sets a minimum purchase amount of $10 for EFTPOS transactions may opt to charge customers who make a purchase below that amount a small fee. That way, a sale is still processed: your business makes a sale, and the customer receives their goods or services. 

If you decide to implement a surcharge, you can choose to charge a flat fee or a percentage of the total transaction value. However, you must ensure that the amount you charge your customer isn’t more than your cost of acceptance. 

Be aware that fees charged for transactions must comply with excessive surcharging rules that have been outlined by the ACCC. Some stores impose a flat fee surcharge of 50 cents for payments that are less than the minimum payment, for example. This is likely much higher than the actual processing fee for a small purchase, and can attract attention from the ACCC. 

If you choose to impose a flat fee surcharge, you must ensure it accurately reflects the amount it costs your business to accept the card. 

Surcharging is simple with Zeller

Zeller is a flexible solution to any surcharging dilemma your business may experience. 

With Zeller Terminal, surcharging can be toggled on and off at any time — giving you the choice to add or remove a surcharge at your convenience. You aren’t locked in, one way or the other. You also have the option to pass on the full transaction fee, or a percentage. 

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With one flat transaction fee of 1.4%, the cost to your business is already low. There's no hidden charges, terminal rental fees or ongoing charges, either. Zeller helps keep more money in your business, so you can focus on growth.

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