Why are shops still getting away with the '$10 minimum' rule?


Published on

One of the ironies of modern payment systems is that you can buy a packet of chewing gum in a supermarket with a credit card as if it was the most natural thing in the world.

Yet go next door for a coffee and you may face a $10 minimum on the transaction and begrudgingly have to buy a muffin or two for the privilege of using your plastic.

The fact that this happens while cash use is plunging, new ways of paying are evolving and surcharges for using a credit card have been regulated down to cost-recovery levels leaves many of us bewildered, frustrated or fuming.

$10 minimum eftpost credit card key card transaction surcharge minimum spend superannuation

Confusion is added to the mix if you happen to carry a debit or EFTPOS card along for the ride. There may be different minimums for different types of card and, although we live in a rather regulated country, it's all quite legal.

Merchants - and they tend to be smaller outfits such as newsagents and cafes with many customers spending smaller amounts - are free to enforce any minimum they choose.

They are limited in terms of a maximum surcharge for using a credit or tap-and-go card but there's no limit when it comes to the dreaded minimum, which typically lands between $5 and $10.

The rationale is there's a cost to the merchant of providing the convenience of using either credit or debit cards (much lower) which include fixed and variable fees, and they should be able to recover them from the user.

The card companies and some banks mightn't like the minimums but there's not much they can do.

However, due to regulation and competition the costs have been falling and are typically pretty low anyway - around 1%-2% - and there's actually a cost to handling cash too.

In terms of time, loss, security, banking etc, the Reserve Bank has put it at about 2%, so cards and other evolving payments systems, such as those on mobiles, seem pretty reasonable.

So what can you do? I've been involved in campaigns to get businesses which don't surcharge to let the public know through stickers on their doors and at the point of sale.

Likewise those businesses, especially the smaller ones, might make the fact they don't have a minimum a competitive advantage by screaming it from the rooftops.

From a customer service perspective, it doesn't make sense to alienate your base with a petty and irritating charge. And it hardly stacks up as economic sense if you are loaded up with more fiddly cash as a result.

In short, merchants don't have to accept cards and they can put up hurdles, such as the minimum, to discourage smaller transactions.

And consumers increasingly don't like to patronise such merchants and if they have a choice they will take their business to more forward-thinking competitors who don't force them into buying unwanted muffins.

Get stories like this in our newsletters.

Related Stories

Christopher Zinn is a consumer campaigner who works in the marketplace of consumer empowerment. He runs Determined Consumer.
March 29, 2018 9.01pm

because the cost of the transaction is significant cost compared to price of the item. Need more competition in the card space.

April 14, 2018 2.11pm

What about Hotels, they all charge a surcharge on a credit card.

Nova .
September 18, 2019 10.43am

Great article! This helps me to understand why are shops still getting away with the '$10 minimum' rule. This article is really helpful. Thanks for sharing this article.

Neville Ponsonbry
April 14, 2020 2.13pm

Stupid article. You have obviously never run a business and dealt with an endless stream of dunderheads who make $3 purchases and have to try 6 cards before they find one that works or wait just before they are about to pay to transfer money between accounts while other customers line up behind them and have to wait! And of course the cashier has to wait for Dundethead with a card to get their act together while the whole process costs $8 in wages or otherwise its wage theft!! idiot!!!

Karen Grayndler
April 23, 2020 11.48pm

I see people doing the same thing with cash, fiddling around searching their bag and purse for coin. I've been on the bus while someone searches for their money. I've been in supermarket lines and someone had had to go out to their car or to a friend outside to get the cash they were short of. and mostly a it's a small amount, There are charges to the shopkeeper for cash as well, just the same as cards. So what is the bloody difference? And also cash is what armed robbers are after not your eftpos machine so in fact, cards make small business safer in a world that any shop can be the victim of an armed robber. Just saying!

chris burns
April 25, 2021 12.31pm

You obviously don't have a small retail business where customers want to pay for a $1 purchase on a card.

The supermarkets are to blame for this as their purchases are far greater and you are obviously biased towards this payment type.