Debit cards: Are Merchants Allowed to Set Minimum Transaction Amounts?

Some Swiss merchants only accept payment via debit card for transactions above a certain minimum amount – 10 or 20 francs for example. This article takes an in depth look at the reasons behind this practice.

Debit cards work very differently to credit cards because when you use a debit card to pay for a purchase, the amount is immediately debited from your bank account. They provide direct access to your account. Examples of debit cards, which are often referred to simply as “bank cards” in Switzerland, include Maestro and V-Pay cards and the Debit Direct Card from PostFinance.

In Switzerland, you can use debit cards to quickly and cheaply pay for purchases and make cash withdrawals in Swiss francs. Depending on the debit card you use, you may not pay anything at all. Debit card comparison tools are included in the private account comparison.

Stores, restaurants, hotels and other merchants which accept debit cards have to pay fees to card transaction service providers known as acquirers (and to the card issuer, either directly or indirectly) every time a customer uses a debit card to pay. In exchange, acquirers handle the administration involved with processing the transaction. Swiss merchant acquirers include SIX Payment Services and Aduno, among others.

Unlike the fees which merchants pay when they accept credit card payments, which are usually based on a percentage of the amount transacted (2 or 3 percent of a purchase, for example), the acquirer fees for debit cards are normally charged to merchants on a per-transaction basis. Merchants pay a maximum of 23-centimes in acquirer fees when they accept a payment via a PostFinance debit card and up to 30 centimes per transaction ordered via a Maestro debit card. When cards are used to pay for small purchases, the acquirer fees add a significant cost for merchants.

Acquirers like Aduno and SIX Payments Services impose guidelines which discourage merchants from setting a minimum transaction amount for debit card payments. However, merchants are not legally obligated to accept payments made via third-party service providers from customers – and in practice a fair number of merchants set these requirements. Merchants are also free to charge additional fees based on how customers choose to settle their payments. For example, merchants can add markups to cover the cost of payments made using checks, credit cards, money orders or installment payment schemes.

A moneyland.ch report

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The moneyland.ch magazine provides accurate, unbiased information on topics related to finance and money. In addition to research and expert interviews, the magazine contains numerous financial guides.

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