It’s happened to me a few times, I walk up to a counter to buy something, a bagel and some milk for example (true story!). The lady at the register points to the sign, “Minimum $3 purchase for credit cards, please!”
So far, I’ve been lucky. I usually don’t carry cash, but everytime this has happened, I’ve always had cash with me.
However, having a minimum charge (or a maximum for that matter) is against terms Visa and Mastercard have.
Here’s the actual wording from Visa, page 14 of the Rules for Visa Merchants for those playing the home game:
Always honor valid Visa cards, in your acceptance category, regardless of the dollar amount of the purchase. Imposing minimum or maximum purchase amounts is a violation.
mental_floss makes a good point:
Now, your local merchants might argue that paying credit card fees on miniscule purchases eliminates their profit margins. And that sounds pretty reasonable.
Even with PayPal, I think it’s something like 30 cents plus 3.2% of the transaction. On a $3 transaction, PayPal would get 40 cents, just over 13% of the total transaction. That’s a pretty hefty amount for a small business, especially if lots of people charge small amounts.
Personally, I think it would be in the best interests of businesses to create a consortium for a new Open Source debit platform (I don’t think it would work for credit). No per-a-transaction fees or percentage cuts, just a yearly subscription fee based on net income to pay for the infrastructure for such a system.