diff --git a/core/api/src/domain/bitcoin/index.ts b/core/api/src/domain/bitcoin/index.ts
index 38044dfde0..038c31eb64 100644
--- a/core/api/src/domain/bitcoin/index.ts
+++ b/core/api/src/domain/bitcoin/index.ts
@@ -2,7 +2,7 @@ import {
   InvalidCurrencyBaseAmountError,
   InvalidSatoshiAmountError,
 } from "@/domain/errors"
-import { MAX_SATS, BtcAmountTooLargeError } from "@/domain/shared"
+import { MAX_SATS, BtcAmountTooLargeError, WalletCurrency } from "@/domain/shared"
 
 export const SATS_PER_BTC = 10 ** 8
 
@@ -57,4 +57,7 @@ export const BtcNetwork = {
 
 // Offchain routing fees are capped at 0.5%
 export const FEECAP_BASIS_POINTS = 50n // 100 basis points == 1%
-export const FEEMIN = toSats(10) // sats
+export const FEECAP_MIN = {
+  amount: 10n,
+  currency: WalletCurrency.Btc,
+}
diff --git a/core/api/src/domain/payments/ln-fees.ts b/core/api/src/domain/payments/ln-fees.ts
index 4d2cc28242..22ce30ce2e 100644
--- a/core/api/src/domain/payments/ln-fees.ts
+++ b/core/api/src/domain/payments/ln-fees.ts
@@ -1,4 +1,4 @@
-import { FEECAP_BASIS_POINTS } from "@/domain/bitcoin"
+import { FEECAP_BASIS_POINTS, FEECAP_MIN } from "@/domain/bitcoin"
 import { MaxFeeTooLargeForRoutelessPaymentError } from "@/domain/bitcoin/lightning"
 import {
   WalletCurrency,
@@ -14,15 +14,22 @@ const calc = AmountCalculator()
 export const LnFees = () => {
   const feeCapBasisPoints = FEECAP_BASIS_POINTS
 
-  const maxProtocolAndBankFee = <T extends WalletCurrency>(amount: PaymentAmount<T>) => {
-    if (amount.amount == 0n) {
-      return amount
-    }
+  const maxProtocolAndBankFee = <T extends WalletCurrency>(
+    amount: PaymentAmount<T>,
+  ): PaymentAmount<T> => {
+    if (amount.amount === 0n) return amount
+
+    const defaultMaxFee = calc.mulBasisPoints(amount, feeCapBasisPoints)
+
+    const getMaxAmount = (fee: PaymentAmount<T>) => (fee.amount === 0n ? 1n : fee.amount)
 
-    const maxFee = calc.mulBasisPoints(amount, feeCapBasisPoints)
+    const maxFee =
+      amount.currency === WalletCurrency.Btc
+        ? getMaxAmount(calc.max(defaultMaxFee, FEECAP_MIN as PaymentAmount<T>)) // allow micro payments
+        : getMaxAmount(defaultMaxFee)
 
     return {
-      amount: maxFee.amount === 0n ? 1n : maxFee.amount,
+      amount: maxFee,
       currency: amount.currency,
     }
   }
diff --git a/core/api/test/integration/services/lnd-service.spec.ts b/core/api/test/integration/services/lnd-service.spec.ts
index 117972ab73..f532d96791 100644
--- a/core/api/test/integration/services/lnd-service.spec.ts
+++ b/core/api/test/integration/services/lnd-service.spec.ts
@@ -11,7 +11,7 @@ import {
 
 import { LND1_PUBKEY, MS_PER_SEC } from "@/config"
 
-import { WalletCurrency } from "@/domain/shared"
+import { ONE_SAT, WalletCurrency } from "@/domain/shared"
 import { toSats } from "@/domain/bitcoin"
 import {
   InvoiceNotFoundError,
@@ -22,7 +22,6 @@ import {
   RouteNotFoundError,
   decodeInvoice,
 } from "@/domain/bitcoin/lightning"
-import { LnFees } from "@/domain/payments"
 
 import { LndService } from "@/services/lnd"
 import { parseLndErrorDetails } from "@/services/lnd/config"
@@ -304,7 +303,7 @@ describe("Lnd", () => {
       const paid = await lndService.payInvoiceViaPaymentDetails({
         decodedInvoice: lnInvoice,
         btcPaymentAmount,
-        maxFeeAmount: LnFees().maxProtocolAndBankFee(btcPaymentAmount),
+        maxFeeAmount: ONE_SAT,
       })
       expect(paid).toBeInstanceOf(RouteNotFoundError)
     })
diff --git a/core/api/test/unit/domain/payments/ln-fees.spec.ts b/core/api/test/unit/domain/payments/ln-fees.spec.ts
index 1fe0fe07e7..8f259352f2 100644
--- a/core/api/test/unit/domain/payments/ln-fees.spec.ts
+++ b/core/api/test/unit/domain/payments/ln-fees.spec.ts
@@ -1,3 +1,4 @@
+import { FEECAP_MIN } from "@/domain/bitcoin"
 import { AmountCalculator, ONE_CENT, ONE_SAT, WalletCurrency } from "@/domain/shared"
 import { LnFees, WalletPriceRatio } from "@/domain/payments"
 import { MaxFeeTooLargeForRoutelessPaymentError } from "@/domain/bitcoin/lightning"
@@ -29,13 +30,43 @@ describe("LnFees", () => {
     })
 
     it("handles a small amount", () => {
-      const btcAmount = {
+      let btcAmount = {
         amount: 1n,
         currency: WalletCurrency.Btc,
       }
       expect(LnFees().maxProtocolAndBankFee(btcAmount)).toEqual({
-        amount: 1n,
+        amount: FEECAP_MIN.amount,
+        currency: WalletCurrency.Btc,
+      })
+
+      btcAmount = {
+        amount: 1000n,
         currency: WalletCurrency.Btc,
+      }
+      expect(LnFees().maxProtocolAndBankFee(btcAmount)).toEqual({
+        amount: FEECAP_MIN.amount,
+        currency: WalletCurrency.Btc,
+      })
+
+      const usdAmount = {
+        amount: 1n,
+        currency: WalletCurrency.Usd,
+      }
+      expect(LnFees().maxProtocolAndBankFee(usdAmount)).toEqual({
+        amount: 1n,
+        currency: WalletCurrency.Usd,
+      })
+    })
+
+    it("does not apply FEECAP_MIN to USD amounts", () => {
+      const usdAmount = {
+        amount: 1000n,
+        currency: WalletCurrency.Usd,
+      }
+      // With 0.5% fee cap, 1000 cents would result in 5 cents fee
+      expect(LnFees().maxProtocolAndBankFee(usdAmount)).toEqual({
+        amount: 5n,
+        currency: WalletCurrency.Usd,
       })
     })
   })
@@ -179,7 +210,7 @@ describe("LnFees", () => {
       it("fails for a 1 sat large Btc maxFee", () => {
         expect(
           LnFees().verifyMaxFee({
-            maxFeeAmount: calc.add(ONE_SAT, ONE_SAT),
+            maxFeeAmount: calc.add(FEECAP_MIN, ONE_SAT),
             btcPaymentAmount: ONE_SAT,
             usdPaymentAmount: ONE_CENT,
             priceRatio,