It’s Saturday at your local corner store, and you approach the counter with a bottle of water, a newspaper and your trusty credit card.

The teller scans the two items, and your heart sinks. “$8 please,” he smiles expectantly.

Taped to the cash register, in blue ink and jagged capital letters, is a sign warning you of the store’s $10 minimum for card payments.

There’s no cash in your wallet, so you begrudgingly reach over to the rainbow of chewing gum packets on the counter and select at random something minty fresh. At least your breath will smell nice.

A newsagency might be one place you get stung by the ‘chewy tax’. Photo: Getty

The additional purchase bumps the total up to $10.20, just enough for you to escape an atrocious fee. You are the latest victim of the chewing gum tax. And there’s nothing you can do about it.

Last week, we all got the good news that the Reserve Bank has imposed new regulations to stop airlines, taxi companies and other big businesses from charging exorbitant surcharges to accept card payments. With new powers for the ACCC to enforce the rule, card gouging could be a thing of the past.

But the rule does not apply to small retailers until September 2017. And it won’t stamp out the chewy tax.

Customer not always right

The New Daily understands it is perfectly legal for retailers large and small to impose a minimum spend for those who pay by card. Most set a limit of $10, but some are as high as $25.

Even cash can be knocked back by retailers. Photo: Getty

Contrary to popular opinion, businesses generally have the ability to accept or refuse any payment method they wish.

The Reserve Bank, which regulates the payments system, says on its website: “… Australian banknotes and coins do not necessarily have to be used in transactions and refusal to accept payment in legal tender banknotes and coins is not unlawful.”

This general ability to choose between payment methods seems to extend to credit and debit cards, The New Daily understands.

But there is pressure from the card companies for this practice to be phased out.

Card companies unimpressed

Two of the biggest players, Visa and MasterCard, oppose the use of minimum spend limits.

“We’re not in favour of surcharging, as you would imagine. We see it as a barrier to electronic payment, and so that would extend to minimum spend as well,” Visa spokeswoman Teneille Rennick said.

The card companies see minimum spends as barriers to trade. Photo: Getty

MasterCard is pushing for the practice to be abolished. Garry Duursma, the company’s head of acceptance development and innovation, warned that businesses with spend limits risk losing customers.

“MasterCard does not recommend that retailers enforce minimum spend for customers who want to use their cards to pay for goods and services,” Mr Duursma said.

“To Australian consumers, it is the benefits of cashless payments – the speed, safety, convenience and the seamless interactions which are created – that drives them to hand-pick which brands and retailers they choose to do business with.”

A recent survey of 1010 Australian cardholders, commissioned by MasterCard, found that 84 per cent resented paying a fee for a small transaction; 61 per cent preferred to pay with cards over cash for smaller transactions; and 40 per cent avoided shops that don’t provide payment options for low-value transactions.

“When retailers don’t provide their customers a choice about how they can pay for smaller purchases, consumers can and will vote with their feet.”

The other side of the coin

Not only can retailers refuse cash, but paying with too many coins may be technically illegal. Photo: Getty

There are also limits on what coins we can and cannot use for payment.

Break these rules and technically you are offering your corner store, supermarket or newsagency ‘illegal tender’. For example:

• Australians can still legally pay with 1 and 2 cent coins, but no more than 20 cents worth per transaction (and businesses can refuse to accept them); and
• We cannot legally use more than $5 worth of small coins (5c, 10c, 20c and 50c) per transaction.

Read more on the Reserve Bank’s website