Glossary

Monthly Minimum

The monthly minimum is a fee structure used by payment processors and merchant service providers to ensure a baseline level of revenue from merchants each month. Under this model, a merchant agrees to generate a specified minimum amount in processing fees each month.

Key aspects of the monthly minimum include:

The purpose of the monthly minimum fee is to cover the payment processor's costs associated with maintaining the merchant's account, including account management, customer service, and technology infrastructure. It ensures that the processor recovers a basic level of cost regardless of the merchant's sales volume.

This fee model is particularly significant for small businesses or seasonal businesses that may have fluctuating sales volumes. Merchants should carefully consider this fee when selecting a payment processor, as frequent underperformance against the monthly minimum can lead to unexpectedly high operational costs. It's crucial for merchants to estimate their average transaction volume and frequency to assess whether they are likely to meet the monthly minimum requirements consistently.

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