I wondered when this was coming. A friend that owns a couple of gas stations told me that he was considering it because his profit margin on a gallion of gas was only 4 cents and credit card companies were charging him almost 5 cents. So unless someone came in a bought something like drink or candy bar he was losing money on just gas transactions.
I can remember many years ago before credit card use was so prevalent that stations charged different prices for cash and credit.
CHARLESTON, W.Va. | When gas station manager Roger Randolph realized it was costing him money each time someone filled up with $4-a-gallon gas, he hung a sign on his pumps: 'No more credit cards.'
He may be the first in West Virginia to ban plastic, but gas station operators nationwide are reporting similar woes as higher prices translate into higher credit card fees the managers must pay, squeezing profits at the pump.
'The more they buy, the more we lose,' said Randolph, who manages Mr. Ed's Chevron in St. Albans. 'Gas prices go up, and our profits go down.'
His complaints target the so-called interchange fee — a percentage of the sale price paid to credit card companies on every transaction. The percentage is fixed — usually at just under 2 percent — but the dollar amount of the fee rises with the price of the goods or services.
As gas tops $4 a gallon, that pushes fees toward 10 cents a gallon. Now stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits shrink or even reverse.
In a good month, Randolph's small operation would yield a $60 profit on gasoline sales. But that's been buried as soaring prices forced the station to pay about $500 a month in interchange fees.
'At these prices, people aren't making any money,' said Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores. 'It's brutal.'
Lenard's group reports convenience stores paid roughly $7.6 billion in credit card fees last year, while making $3.4 billion in profits.
The way interchange fees are structured has long annoyed retailers, prompting calls for relief.
Legislation pending in the U.S. House and Senate would allow merchants to bargain collectively with major credit and debit card companies.
The National Retail Federation says gas prices point to the unfairness of the system: Gas stations are paying more in interchange fees because the price of gas has gone up, while the cost of processing credit or debit cards remains the same.
'We have always contended that it doesn't cost Visa and MasterCard any more to process a $1,000 transaction than it does a $100 transaction,' said J. Craig Shearman, vice president of government affairs at the retail federation.
The credit card companies say fees are just part of the cost of doing business.
MasterCard has capped interchange fees for gas purchases of $50 or more, said company spokeswoman Sharon Gamsin.
Accepting MasterCard also gives gas stations 'increased sales, greater security and convenience, lower labor costs, and speed for their customers at the pump,' Gamsin said in an e-mail to The Associated Press.
Visa argues that the fees are offset 'by the tangible benefits to stations and their customers, such as the ability to pay at the pump,' the company said in a statement to the AP.
Absent congressional action, gas stations are seeking other relief, including discounts to customers who pay in cash.
Shipley Energy, which owns 23 Tom's Convenience stores in Pennsylvania, has partnered with a new credit card company, Revolution, which charges smaller interchange fees.
Bob Astor, wholesale fuels business manager for Shipley, said those savings get passed on to customers as cheaper prices at the pump. Customers who pay with the card get an automatic 10-cent discount.
Gas stations in South Carolina, Georgia, Maryland, New Jersey and Arizona are among those offering cash customers a discount, with savings from 4 cents to 10 cents per gallon.
The Connecticut General Assembly recently passed legislation to make it easier for stations to offer discounts for cash purchases, bidding to cut consumer prices by 10 to 12 cents on average.
Discounts for cash customers may not, however, be the stations' salvation.
The National Association of Convenience Stores reports that about two thirds of transactions at gas stations were with credit or debit cards in 2007, a figure expected to rise this year.
'The problem with cash discounts is, if people don't have the cash or don't want to spend the cash, you've inconvenienced them,' Lenard said.
The experiment at Mr. Ed's Chevron, though, has paid off so far.
The station has been in business for 44 years and the ban on plastic hasn't scared many people off, Randolph said.
'We've got generations of customers who come here,' he said. 'Most of them have accepted it.'
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How would you pay at the pump then? I hate going in if I don't have to.
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If they're losing money -- bump the price on a gallon up a cent or two. Or lose a lot of customers who WILL NOT go inside shady places and pay with a buttload of cash...
Sorry, I'm not walking into a gas station outside of birmingham at 2 a.m. with people knowing that I'm about to fork over $40-$60 to pay for a fill-up...
Cash is Dyinggggg.... and credit card companies are making HUGE PILES OF CASH! I heard that Mastercard is starting to upholster their office chairs with C-notes....
Life is something that you can't control.
When you try to hold on to it, it makes you let go!
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If they're losing money -- bump the price on a gallon up a cent or two. Or lose a lot of customers who WILL NOT go inside shady places and pay with a buttload of cash...
Sorry, I'm not walking into a gas station outside of birmingham at 2 a.m. with people knowing that I'm about to fork over $40-$60 to pay for a fill-up...
Cash is Dyinggggg.... and credit card companies are making HUGE PILES OF CASH! I heard that Mastercard is starting to upholster their office chairs with C-notes....
Most likely gas stations will start charging more for gas bought using a credit card. I can remember when stations displayed two prices cash and credit.
I also read that some stations are considering not carrying the premium grades of gas any longer b/c people arent willing to pay the extra $$ for the higher grades.
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I'm the same way...I hardly ever carry over $25 cash on me. It's just too easy to use my debit card everywhere...even at the pump. I also have a Chevron/Texaco gas card although I only carry it when I travel.
Something I heard about on TV last week was the concern about consumers using credit cards for gas when consumer debt is at an all time high. This gas crunch is hurting everyone. Some people overspend and live beyond their means. Continually putting gas on plastic, carrying a balance and NOT paying it off each month is going to spell T-R-O-U-B-L-E in the future.
I used my gas card this way one time years back and before I knew it had about a $700 gas bill. I decided to take it out of my wallet and only carry it when traveling.
And let's not forget it's still hurricane season. God forbid we have a major hurricane to strike land and gas will go up even higher. :-(
Old Spice: If your grandfather hadn't worn it...you wouldn't exist.
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I wonder if someone is pulling your leg.
It's hard to believe that the stations profit is only 4 cents a gallon.
At today's prices, that is only a 1 percent profit.
The oil companies are making billions of windfall profit because of speculators in the futures oil market.
The price is approaching the limit most of us can bear.
If the idiots in Washington would quit listening to certain groups, we would have cheaper electricity, more fuel efficient vehicles, and choices about the kind of car we want.
We have not begun to touch the potential of nuclear power, hydo electric power, wind power, photoelectric cells, the list goes on.
I think the price of fuel is high enough now that the alternatives should be viable.
But of course, the people with enough money to fund such, know that about the time the alternatives profit margins become attractive, the oil reserves we have been sitting on will become suddenly available.
Or the oil producing countries will get worried and drop the price just enough to keep on the hook for a while longer.
We have been playing this game since the created oil shortage back in 1973.
Looks like we would have learned our lesson by now.
Old Iron Collector
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Old Iron Collector
