It really depends on location. At my uni, most of everything is pay with cash, all the shops are close to an ATM so it really isn't a big deal and can help move things along if there are a lot of people around.

Other stores though it is frustrating, the thing that frustrates me the most is news agents with a $10 minimum when a newspaper is probably less than $2 and the average magazine comes in under to. I've offered to pay $10 for a $8 magazine before to avoid the hassle just to be told that they won't let me so I have to buy something I don't want to make the $10.

I understand the transaction fee problem, but I think the goodwill you get by allowing pay by card no matter how small the purchase offsets this.