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Is It Really Worth It: $4.98?
Is It Really Worth It: $4.98?

Is It Really Worth It: $4.98?

Imagine my surprise, visiting one of my preferred coffee shops today, only to find they’ve implemented a new minimum charge for credit card / debit purchases.  Really? What’s that going to achieve?  Improved profitability?  Update at the end…

Today is a mix of rant mixed with reasoning and common sense.

We’ve all seen it at some time or another, different—typically small—businesses that decide it’s time to implement a minimum charge for plasticized transactions.  $5 seems to be popular.  And, quite often it’s either ignored or later changed if not outright eliminated.  If the minimum charge doesn’t go away, I don’t know, because I stop going there.

So, what’s behind this $5.00 (sorry, at Two Brothers now, it’s “4.98”, really?) minimum?  The Top-2 justifications I’ve heard elsewhere include, “It costs us 2-4% extra for cc transactions…” or, “…it takes our staff longer to process them, and we lose time when we’re busy…”

What about the customer’s perspective?  I don’t know about everyone else, but I rarely carry much cash any more.  For years now, I’ve almost solely relied on my debit card for such transactions.  Why in the world do I need to make a ‘special trip’ to the bank, solely for having some change in my pocket when I come see you?

Heck, I’ve literally done a week-long trip from Detroit, to San Francisco, and back, with $5.00 in my pocket!  I kept ‘meaning’ to go to an ATM, kept forgetting…plastic was all I needed.  The only thing I needed cash for (~10 years ago already), was the $3.00 Golden Gate toll.

Let’s say I arrive and realize I have no cash.  Typically I’d grumble, leave, and just continue on about my day.  But let’s say I do go to the bank for cash.  My bank’s a few miles away, or about $0.60 in gas, round trip, not to mention my time and aggravation (Oh, and there’s two coffee shops right by it, too).  On a $4.08 fancy coffee, that could be a 15% bump in expense…just counting gas.

As a customer, if your expenses are that tight, I’d prefer you just bump your prices the 2-4% if you have to.  It’ll cost me far more than that if I have to ‘go get cash’ just for you.  And, a preference for cash, lost productivity…really?  Handling cash is itself an expensive process.  With modern POS (point of sale) systems, a swipe of the card, and you’re done.  Making change for my $5, $10, or $20 bill, let along having to count my pennies if I bring them in, will take far longer than almost any plasticized transfer I’ve seen recently.

But, Sir, we have a ‘coffee/gift card.’

A coffee shop favorite.  You charge it with as much as you want, get your 10th (11th, 12th, or however-many) coffee free, and the transaction limit doesn’t apply.  Again, really?  From the business perspective, now you have to maintain an accounting of my purchases, add an additional transaction (the charging of the card itself in the first place), and still go through the ‘productivity-losing’ motions of a ‘charge’ transaction anyway.  Eventually followed by, “I’m sorry, but there’s only $2.37 left on your card…”  On top of it, you’re imposing a 10% penalty on yourself by giving away the 10th (11th, or whatever) copy of your product.

From myself, I like the simple punch-card approach for building loyalty.  Paper’s thin, flexible, and weighs almost nothing.  And, yes, I alter my behavior.  If your product is comparable to the guy next door, but you have a loyalty card and he doesn’t, odds are I’ll be seeing you more often :) .

More coffee shops seem to like the plastic equivalent of the punch card.  Why not?  The demographic data they can help capture is valuable—to the business.  From the customer side, there are two basic problems with them.  First:  Let’s say I charge $25 on your ‘store’ card.  I’ve basically loaned you $25 spread over how ever long it takes me to consume it.  Sorry, there’s no value in it for me to be giving you a loan.  Second: Thank you, but I’ve got enough plastic in my wallet already.  You’re competing with others for the space in there—and I think you’ve seen I don’t hold these cards in high esteem.  Bonus: Now you’re passing transaction costs off on to me—and I literally have to carry it around.

No one likes to see their costs go up. Ever. Period.  Really.  But if they need to, if they do, we’d rather they just be openly dealt with, with a minimum of bother.

So, here’s my Solution:

  • If your costs dictate:
    • Increase prices, if you really need to;
    • Stop assessing yourself a 10% penalty;
    • Do away with the ‘free’ whatever after 10. I’d rather you stay in business than give me a freebie, if it comes to that.
  • Get rid of the $4.98 minimum, it’s pure annoyance for your non-cash soon-to-be-former customers.

Remember: In this specific locale, there are 5 other coffee shops nearby that immediately come to mind.  I don’t know about the coffee-seller directly across the street, but I know none of other 4 have a $4.98 minimum for plastic.  And, your repeat customers don’t come to you because you’re 2-4% cheaper.  Odds are it’s because of your nice environment, your friendly staff, or, you’re on the right side of the road en route the expressway.


Jim Pratt provided a good response to this article, over at (it’s mirrored over there).  He indicated that according to, such policies as “$5 Minimums” are against most merchant agreements with credit card issuers.  The article, Some merchants don’t play by the credit card rules, is worth 5 minutes to read.

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