Monthly minimum

How it works

At the end of each billing month your processor totals the fees it earned from you and compares that against the contracted minimum. If you fall short it adds a line, usually labelled monthly minimum fee, for exactly the difference. Clear the threshold and the line never appears, so you are never charged twice for the same month. Traditional merchant accounts commonly set the figure somewhere between $15 and $35 a month. What it does is convert a variable cost into a fixed floor: harmless when you are busy, expensive when you are not.

Seasonal businesses feel that hardest. A landscaper or a ski shop can pay the full minimum for four or five months of the year while processing almost nothing, and it distorts the effective rate badly, because a small denominator makes even a modest fixed charge look enormous as a percentage. What decides the real cost is which fees count towards the minimum. Contracts that count every processing charge including interchange are barely ever triggered; contracts that count only the processor's own markup set a far higher bar. The minimum also sits alongside your monthly account, statement and PCI fees rather than replacing them, so get that in writing before you sign.

Worked example

A slow month: $3,000 across 60 sales, against a contract with a $25 monthly minimum measured on the processor's markup of 0.25% plus $0.10 per transaction. The markup earns $7.50 on volume and $6.00 on transactions, so $13.50 in total. The processor adds an $11.50 monthly minimum fee to bring it up to $25. On $3,000 of sales, that floor on its own is 0.83%.

Frequently asked questions

Do I pay a monthly minimum if I process nothing at all?

A month with zero sales triggers the full minimum, because the whole amount is the shortfall. Dormant accounts keep costing money, and the monthly account fee usually applies on top. If you expect months when the business is closed, negotiate the minimum out of the contract, or close the account properly rather than leaving it idle.

Is a monthly minimum negotiable?

More often than merchants assume, particularly if you can show consistent volume or you are moving across from another provider. A processor would rather waive a $25 floor than lose the account, and plenty will drop it for the first year or remove it entirely above an agreed volume. Get any waiver written into the agreement itself. A promise from the sales rep is not a term of your contract.

How much volume do I need to avoid a monthly minimum?

Divide the minimum by what your processor earns on an average sale. On a 0.25% plus $0.10 markup with a $50 average ticket, each sale earns them just under 23 cents, so a $25 minimum needs roughly 112 sales, or about $5,600 of volume. Ask which fees count towards the minimum before you rely on that, because counting interchange changes the answer completely.