Minimum spend for card transactions

[Dartfordian]

Many shops ask for a minimum spend of £5 or so before they will accept a card payment to help compensate for transaction charges. Thankfully, this will not be illegal under the new directive that will ban surcharges for debit and credit card use from January 2018. However, some commentators believe that, as shoppers continue to switch away from using cash, retailers risk losing custom by putting barriers in the way of card use.


Do you have a minimum spend and are you thinking of getting rid of it?

 

[TotalWebSolutions]

I rarely use cash now and I love that I can go into my local Tesco and tap my card for a 70p newspaper. If they imposed a minimum of say £1.00 it would inconvenience me in that I would have to either spend more each day or go and draw out some cash for the week to cover my daily newspaper trips.

 

[Mr D]

Likely Tesco can negotiate no minimum charge per transaction. Have heard of some companies imposing so many pence minimum fee. 20p on a £5 transaction is a little annoying, its a lot annoying on a 70p transaction.

 

[Paul Kelly ICHYB]

Who is charging 20p on a £5 transaction?

Both credit & debit charges are % and if you are paying more that 0.75% for debit and 1.1% for credit as a low volume user (<£25k yr) or 2p min transaction charge, you are being mugged!

 

[Mr D]

Paypal for one.
Some of their fees are fixed rate of 20p plus percentage.

https://www.paypal.com/uk/webapps/mpp/paypal-fees

 

[Paul Kelly ICHYB]

With PP it would be more, as on top of this there is their %.

However, anyone with turnover about about £12k, a merchant account is the logical route - most retailers would not choose PP.

 

[Mr D]

Depends on the retailer.
Online there isn't a choice if you sell on ebay. Offline there are multiple choices.
My company had a card machine for 3 years used at local markets and events. While transactions were percentage charge, if not used enough there was a minimum charge.
You would think over the course of a few hundred days it would be used enough to not have the minimum charge applied. Not the case for us.

 

[mhall]

We have had a £5 minimum spend for the last 10 years and see no point in changing that - we also use it as a tool to increase customer spend. We have not had a single person complain in all that time. Once you add the extra charges - not just the percentage or flat rate charge but including machine rental, consolidation time and even paper rolls, putting a minimum charge makes absolute sense. Contactless is a little different on percentage but time spent consolidating increases.

 

[pen2670]

Use to have a £5 minimum charge and like M Hall most people didnt complain, just bought more.

Stopped it about 18 months ago when several of the nationals stopped their minimum charges so a few customers started to complain AND I worked out that bank fees for paying in cash were higher than our card machine fees.

 

[gingerdad]

Never had a minimum as pay a % so makes no odds on amount. Have picked up quite a few small sales as next door does impose a minimum.

It really annoys me if people have a minimum or don't take contactless/Apple Pay. And I have left shops and bought elsewhere.

 

[mhall]

We have never had a single person moan about us not being contactless in the shops that we haven't got it, rather the reverse. Some people are still very suspicious about it, especially those who are liable to lose cards and mistrust the bank. Nobody has ever asked to pay by Apple Pay, even where they can so it's not something we have on our priority list and, not being an Apple fan, that suits me just fine.

 

[mhall]

Use to have a £5 minimum charge and like M Hall most people didnt complain, just bought more.

Stopped it about 18 months ago when several of the nationals stopped their minimum charges so a few customers started to complain AND I worked out that bank fees for paying in cash were higher than our card machine fees.

We use the post office to deposit cash, which is still free (for now) if you deposit less than £1,000 per month for each branch.

 

[pen2670]

Interesting, thanks!

Try and save fees by paying it off the company credit card, but getting to the bank when it's actually open can also be a pita, whereas the post office is open until 5:30...

 

[Mr D]

Does your bank have a nightsafe facility?

 

[gingerdad]

We deposit cash in the local post office daily. £1000 per transaction and no charge. It's also open 7am to 7pm seven days a week. It's a post office local in a small village

As far as contactless / Apple Pay / android pay. Each to their own I've walked out of places that don't take it and tought a staff member in one shop that they did have it. Don't often travel with a wallet anymore.

 

[lesliedocherty]

We have always had a £5 minimum, no plans to change it, think that there is no charge for contactless payments, but i may be wrong

 

[TomJ83]

As a customer I see more positive on there being a minimum spend limit rather than surcharges for debit and credit card use. As @mhall notes, the minimum spend limit could be used as a tool for a retailer to increase customer spend. However, as society becomes more accustomed to card transactions and turning away from cash I see a risk where retailers will lose customers because of the minimum spend limit. As it is now, it's not too much of a problem having such a limit, but fast-forwarding 2-3 years, this might become an issue.

 

[bovine]

I installed a new epos system with integrated card system into a staff canteen recently, average spend is under £3.50 per transaction and 3/4 of the sales are by card/contactless. Phones, watches, card all work.
The main advantage in this setup is less cash handling and speed - the card processing is very quick.
Not that long ago putting eft/card system into this sort of site would be unheard of. More likely to be a cashless card system. Now its far more common and much more affordable. But every retailer needs to do their own sums I think.

 

[gingerdad]

Just been looking at ours .4% for debit cards and .9% for credit cards. Commerical cards higher but we get few of those.

Was told yesterday in a shop with a minimum it was due to transaction fees but that's just not correct anymore or you need to re-negotiate your rates.

 

[pen2670]

@mhall tried the post office thing for the first time last month. Paid in £500 and it took forever to clear, but still I felt smug that there would be no fees . Until today when my notification of charges came in from the bank...

£500 Post Office Cash Paid In £1.50 per £100. £7.50

Guess it doesn't work with Barclays :-(

Worth a try though ;-)

 

[mhall]

Sorry, should have made it clear. We have a separate Post Office Account that we pay cash into. Once it is in then we can BACS it across to the HSBC Business Account via internet banking

 

[gingerdad]

We bank with Yorkshire and cash paid in at the post office clears straight away.