Many small businesses in the U.S. have recently set minimum purchase requirements for credit and debit card transactions to around $5 or $10, according to a report from Cleveland, Ohio, television station WEWS. Retailers say in an effort to cut the amount of fees they pay to credit networks, which can rise to tens of thousands of dollars annually.
This change has come because federal law now allows merchants to set minimums, the report said. Previously, the networks prohibited them from doing so in exchange for allowing customers to make credit and debit card purchases.
Most small businesses say they operate on very thin profit margins of just 2 or 3 percent, meaning that high transaction processing fees can take a large bite out of their profits, the report said. For credit and debit transactions of a few dollars, many independently owned companies may actually lose money.
Consumers whose purchases don’t exceed vendors’ minimum can avoid the problem by carrying cash instead.
[Featured products: Shop for a prepaid credit card on Credit.com]