The $4/gallon noose tightens: credit cards not welcome at some gas stations
Photo by ^Riza^. Licensed under Creative Commons license 2.0.
Man, expensive fuel has all sorts of unexpected impacts. People stealing four thousand gallons of diesel in LA. More people running out of gas on the side of the road. More four-day work weeks. And now, ta da, gas stations that don't accept credit cards.
Well, there's at least one station that doesn't: a small shop in Charleston, West Virgina, according to the AP. The problem is the way that credit companies get their money, which is a percentage of the total sale (that's why there's usually a $5 minimum purchase, so the store can make at least some money after the credit company has taken their chunk). The problem for gas stations is that higher gas prices mean that the credit companies are getting more pennies per dollar sold. Sadly, for the station owners, the station's mark up is a set amount (the AP says around 11 or 12 cents a gallon) and so doesn't grow when the price climbs. With $4 gas, the credit card companies get about 10 cents a gallon. It's easy to do the math and see that the station owner isn't exactly rolling in dough here. While the AP could only find one station that has banned plastic money, a lot of station owners are not happy with the way things are headed. Don't be surprised if this trend grows right along with gas prices.
[Source: AP]
Reader Comments (Page 1 of 1)
brn 8:41AM (6/19/2008)
"credit companies are getting more pennies per dollar sold"
I really hope this is a typo and you mean per gallon sold.
It depends on your deal with the authorizer. Often times it is a percentage. Most large chains negotiate a fixed amount per transaction, so this article wouldn't apply to them. In very few cases, I've seen it where a chain will negotiate a monthly fee, regardless of dollar amount or number of transactions. That last one is quite rare though.
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dirtkahuna 8:27AM (6/19/2008)
What the gas stations really want is for everyone to use their in-store ATM. That way, they earn a profit every time you use their machine to get enough cash to pay for your tank of gas.
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Steve 8:39AM (6/19/2008)
My dad holds this theory that suggests the quickest way to compell people to reduce fuel consumption is to remove the credit card scanners from the gas stations. Make drivers go to an ATM, pull cash out of their bank account, and physically hand over their hard-earned dollars to the cashier.
He believes the psychological impact of physically parting with one's money -- along with removing from the equation the financial crutch credit cards have become -- will go a long way to prompting people to change their driving habits, errand iternaries, and future car purchases. SUVs aren't the root cause of our excessive consumption habits; cheap fuel and easy credit are.
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MarkR 8:55AM (6/19/2008)
"11 - 12 cents a gallon markup"
Where the hell is that at? wow how things have changed. When my dad was in the business about 10-15 yrs ago. The mark-up was 1-4 cents a gallon in south Texas. At 11-12 cents a gallon he might have stayed in the business, instead he closed the pumps and stuck with auto repair. your right the guys at the sales point don't make much. Also brn is right it depends on your deal with the clearinghouse. but the smaller you are the more screwed you are, because they only give the big discounts to big volume.
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Mulad 9:28AM (6/19/2008)
Ironically, I started paying by card because fuel prices had been rising several years ago, and there had been an increase in the number of drive-offs. In response, some stations in my area had gone to "pre-pay or credit card only" setups. I will *not* pre-pay, so I've been using my card all the time since then.
But yeah, it's a lot more troublesome now to pay with cash. My old car had a fairly small tank, so I think the most I ever paid for fueling it was about $30 (though I'd only paid around $20 for most of the time I had it). My current car has a bigger tank and fuel has gotten much more expensive, so now I'm paying $50-60 each time. It's not a problem to lose one bill from your wallet, but considering that I usually only take $100 from the ATM at a time, losing 3/5 of my cash in one shot is not so fun, and I imagine most people are worse off than I am.
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Tim 9:29AM (6/19/2008)
I'm an ISO and I process the credit cars for hundreds of restaurants, hotels and gas stations. Interchange rates to merchants contain a fixed charge per transaction PLUS a discount based on a percentage of the sale.
That percentage is different depending on the card type and whether the card was swiped or keyed in. Business cards and cards with benefits to the consumer cost the merchant more than those consumer cards without benefits. Pin based debit cards are priced differently than signature based debit cards or credit cards. International cards are different too.
Interchange is VERY complicated therefore most merchants are being ripped off by processor "surcharging" and bait & switch pricing and they don't even know it. The big banks can play very dirty and 95% of the field reps out there don’t fully understand the card association interchange and services they are selling.
BRN's comment is an example of interchange confusion and often that confusion is intentional (like the old pea under the shell game) so that the processor can maximize profits. The government regulates every financial service BUT Visa & MasterCard interchange rates and bankcard processors because the subject is too confusing and the lobbing pool too deep. It’s understandable since those short-sighted, pandering, mental midgets in congress can’t even balance the budget because they are too busy holding hearings about steroids in base ball.
I’m going to take a shower now…
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1985 Gripen 10:36AM (6/19/2008)
I've noticed that now some stations have started displaying a separate price for cash versus credit. This just recently happened. Until recently only one price was displayed on the big sign in front.
I understand that the price margin for the station owner is razor thin. In fact, most stations make more money in their convenience store than they do selling fuel. That's why most stations have either a mini-mart or a repair garage attached.
Several years ago the oil companies started buying-back their outlets from franchisees and oftentimes the franchisees welcomed a buy-out because the profits in retailing fuel just aren't there. Even though the price of fuel is high the profits for a station owner are still low, unfortunately.
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armmat 11:31AM (6/19/2008)
My heart bleeds for all involved the fuel business...
YEAH RIGHT....
Tough shit...they should've gotten into something less driven by greed and more by just a bit of morals.
Same goes for the retarded consumer who keeps buying the stuff and complains about high fuel prices. Idiots.
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stevejust 1:27PM (6/19/2008)
@Steve: You said, "SUVs aren't the root cause of our excessive consumption habits; cheap fuel and easy credit are." You are definitely right in the sense that were it not for cheap fuel and easy credit, most people wouldn't be driving their SUVs because many wouldn't have been able to purchase them, and if we had prices like Europe for the last 10 years most people wouldn't have wanted to purchase them even if they could afford them in the first place.
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Andy 4:01PM (6/19/2008)
I've noticed I can't fill my tank any more because the Chevrons here in the South SF Bay Area cap purchases to $75 even on a credit car. Why is that?
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GenWaylaid 5:04PM (6/19/2008)
Those station owners and credit card companies better come up with a fix, because I am not going indoors to pay for my gasoline. I sure as hell am not going to pre-pay and risk either not topping up or overpaying. The gas station is the last place where I want to waste any time in my day.
If I see a gas station that won't take my credit card at the pump, I drive to the next gas station.
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Tim 5:19PM (6/19/2008)
Those Pay-at-the-pump caps are set to protect the merchant and customer against potential fraud since the cards are not presented to a cleark who could check ID and signature. It is also there to prevent someone from locking the nozzle open, setting it on the ground and walking away spilling hundreds of gallons of gas before someone notices. People do strange things.
The customer can either pump twice thus splitting the charge or they can complain to the manager and choose another station. Once the station sees that they are losing business, they may raise the caps. Keep in mind also that many of these caps have been in place for years and have not been adjusted upward during this recent rapid gas price increase.
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Wave54 5:57PM (6/19/2008)
There are a few interesting details in this article:
http://news.yahoo.com/s/ap/20080618/ap_on_bi_ge/gas_prices_credit_cards
I was surprised that, on gasoline sales, the credit card fees are more than double the profit of convenience store operators. I'm sure that 99% of gas customers had no idea how much credit/debit cards have been adding to fuel prices.
Here in CT, a local station is offering a $.20/gallon discount for cash.
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SCMTB 10:04AM (6/20/2008)
I feel pretty confident in saying that there are a few pumps here in South Carolina (of all places) that actually have a pump/island that you can put cash into without having to go into the store. Not sure how it spits out change or if it does (maybe you prepay it basically) but that is the solution to wasting time in the line at the counter. I agree with most here that I hate going into the "store" to do ANYTHING...unless I'm traveling with the wife and kid.
One lesson in this: convenience costs money.
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john riley 9:10AM (6/20/2008)
I've been known to actually take trips in my car. Credit cards have been getting more difficult to use all the time. Difficult to use a Canadian card in the US, and apparently impossible to use a US card at some stations on the 401 in Ontario (the direct route between Detroit and Buffalo). I think this is more about fraud than margins, but I don't know for sure.
I have started to do debit, if I can't use the card at the pump. So far, that has worked.
Even in a car that gets mid 30's mpg on the highway, I don't see me traveling on a multi-day trip with a big wad of cash to pay for gas.
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GOOD'N 2:56PM (6/20/2008)
Bummer. I have asked the local gas station near my house if they accept IOU's, but no soap. Where is the love? At my advanced age I am considering the creation of a lien credit card good at millions of business outlets until the balance reaches the value of my property - then I call the bank and kill myself. It is good to have a plan.
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Joseff 7:59AM (6/21/2008)
Lovely photo. But in fact the petrol station pictured sells at $2.44/gallon.
http://www.pertamina.com/index.php?option=com_content&task=view&id=3933&Itemid=33
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