The Dodd-Frank Wall Street Reform and Consumer Protection Act allows retailers and other businesses to require up to a $10 minimum for credit-card purchases, the Boston Herald is reporting.
The new law doesn’t apply to debit-card purchases. Credit-card networks such as Visa and MasterCard used to prohibit businesses from setting minimums, but the financial reform law passed in July now prevents them from including such terms in their merchant agreements. It also gives the Federal Reserve Board the power to raise the minimum beyond $10, the paper reports.
The new law could save retailers tens of millions of dollars annually in fees that previously took a bite out of their profits, according to the Herald report.
The fees, which are charged to merchants by credit-card networks and banks or credit unions that issue the cards, can be a set percentage of a transaction amount plus a per-swipe fee. They vary from merchant to merchant, averaging 2 percent to 2.5 percent of a transaction plus a dime per swipe of the card, the paper reports.
These fees tend to be higher and more burdensome for small-volume businesses that can’t negotiate good rates and handle a lot of small-ticket transactions, a spokesman for the National Retail Federation, which supported the minimum-charge law, told the Herald.
To read the complete Boston Herald article, click here.