Minimum amount card transactions are a way for merchants to avoid paying processing fees on small credit card transactions. But it's essential to adhere to the legal and contractual limitations before implementing a minimum purchase amount.
In 2010, the rules surrounding minimum credit card charges setting a minimum credit card charges changed. Prior to 2010, these guidelines were overseen by the processing agreements set by Visa and Mastercard. The large credit card companies prohibited the setting of minimum purchase transactions because that practice limited their profit margins.
The Durbin Amendment which was passed in the wake of the 2008 recession and financial markets crash overruled the credit card companies' ban on minimum charge transactions. This merchant friendly ruling allows business owners to establish minimum purchase rules for card transactions, ensuring that they- and not the big credit card companies-can preserve their bottom lines.
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