Posted on 07/02/2007 2:00:24 PM PDT by E. Pluribus Unum
FARMINGDALE, Maine -- Ron Mason has closed the gasoline dispensers at his Airport Automotive station in Farmingdale, Maine; he will continue to run the business, but only as a full-service auto repair shop. He said he is fed up with fluctuating gasoline prices and credit card fees that have been eating up his profits.
“When you’re paying almost 3% to process credit cards, and that includes debit cards, that’s 9 cents right off the top,” Mason told The Kennebec Journal. “When you’re only making 5 to 7 cents a gallon, that doesn’t add up. Along with that, as the dollar figure goes up on gasoline, the credit card expenses increase as well.”
Credit card companies and banks get an average of 1.75% on every gallon of gasoline sold, and credit card processing fees now rank as the second-biggest expense for stations operators, according to the report, citing the National Association of Convenience Stores (NACS).
Nationwide, 65% of gasoline purchases are made with credit or debit cards, said the report.
Mason is not alone in the area in his decision to stop selling gasoline, the newspaper said. James Fitzpatrick, owner of Jim’s Variety in Fairfield, Maine, did the same thing. He said he was doing all the work by providing the labor, maintenance of the pumps and insurance—and someone else was getting all the profit.
“I haven’t sold gas since the end of March,” Fitzpatrick told the paper. “At the time, the company that was supplying me with the gas quoted me 3 cents more than Cumberland Farms down the road was retailing it for. So actually, in 2006, when you figure it all up, I lost money selling gas.”
John Babb, president of J&S Oil, Manchester, Maine, said society has reached a point where cash is no longer king. Credit cards, he said, have become the leading form of payment. And with the price of gasoline escalating, more and more are turning to credit cards for payment. “Just this last year, credit card companies made more on a gallon of gas than the retailers did,” Babb told the Journal.
He said J&S Oil has tried to design its convenience stores so in-store profits—store sales that come from drinks and food—offset the costs lost on the sale of gasoline. He said he does not believe anyone in the industry, at this point, has increased the price of gasoline to cover costs associated with credit card sales. “There has been some movement, not so much in this area, but in other parts of the company, where they give [customers] a discount when they pay in cash,” he said.
Credit card companies also are limiting how much a customer can pay at the pump, he said. The pump actually shuts down. That is frustrating to customers, said the report, especially SUV owners who want to fill up their 35-gallon gas tanks. MasterCard’s pay-at-the-pump limit is $75. Visa and Discovery, limit customers to $50, said Babb.
Joanne Trout of MasterCard told the paper that the cap is to protect merchants and customers from fraudulent transactions. When customers use their credit cards at the pump, the transactions are authorized without knowing the final bill.
“[A customer] has to shut down the pump and swipe their card a second time,” Babb said. “Merchants are then charged a second transaction fee by the [credit card] processors and then the credit card companies charge a percentage rate, which can be between 2% and 4%, and that’s where the customer and merchant take a beating. As the price of gas rises, so does the actual cent per gallon they take from us; however, our margin of cents per gallon does not.”
Sharon Gamsin, a spokesperson for MasterCard Inc., told the paper that fuel retailers “get a huge amount of benefits from using cards.” She said credit cards used at the pumps cut down on labor costs. The automated sale reduces the amount of time a cashier has to work the register. Cards also encourage people to fill up, rather than pump round dollar amounts. And they protect retailers from theft. Stations do not have to keep as much cash on hand.
Babb said retailer groups are trying to persuade congressional leaders to look into interchange fees and other credit card company practices.
I'm going to start paying cash again.
CitiBank makes way too much.
If I remember correctly, they are the only industry that are legally allowed to charge a different retail price by payment method.
Discover Card gives a 5% rebate on gas purchases, which amounts to about 15 cents a gallon right now. Seems like it’s actually costing them money when I fill up. I don’t know what their angle is, but I’m not complaining.
Sharon Gamsin, a spokesperson for MasterCard Inc., told the paper that fuel retailers “get a huge amount of benefits from using cards.” She said credit cards used at the pumps cut down on labor costs. The automated sale reduces the amount of time a cashier has to work the register. Cards also encourage people to fill up, rather than pump round dollar amounts. And they protect retailers from theft. Stations do not have to keep as much cash on hand.
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those empty talking-points remind me of alan colmes, LOL
MasterCard and Visa prohibit surcharges for credit payment, but allow retailers to give a cash discount on a purchase.
American Express discourages, but does not prohibit credit surcharges, but bars discrimination; that is, if a retailer does not charge a surcharge on its MasterCard/Visa purchases, then it cannot on its Amex purchases.
Not sure what Discover’s policy is.
I was on his side until he went crying to the government.
Take credit cards is a neccessity in todays market. You have to do it in most businesses. And in reality, you never know what it cost you to take that card for payment until the end of the month. For Visa and Mastercard there are 258 different interchange levels.
I’m not sure about those price limits. I use a Visa to pay at the pump regularly for my Jeep, and go over $50 at the pump all the time. I filled up a friend’s double-tank pickup not long ago too and that was something like $109.
Most of the gas retailers here have a surcharge on credit/debit use. Averages something like 50 cents per transaction.
It is actually a pretty grey area. And often, semantic legal arguing over what certain words mean is what it comes down to at the end of the day.
I know one of the divisions here at work relys heavily on credit card acceptance to get payment. And we are paying huge amounts in interchange to do so. We looked at charging a fee to use a credit card to pay and legal determined we could charge a "convienence fee" and we were AOK.
Also little know to the consumer is that anytime you go into a store and they have a sign that says "$X Minimum for credit cards" the owner of the store is in violation of their merchant agreement and if Mastercard/Visa found out they were requiring a minimum purchase, they would lose their merchant processing ability forever!
When the jerk working the counter looks right at you, and refuses to turn the pump on , the heck with going in to pay cash. I am not going to make two trips. I’m glad they loose on the credit card. They should of turned on the pump. If they don’t trust me to pay, it is their decision, and their consequences.
I was told, by somebody who knows the costs, that it is a wonder anybody sells gas at all. You have to buy very expensive tanks. You have to monitor/test these tanks and the soil around them at regular intervals. After about 15-20 years, you have to yank the old tanks out of the ground and replace them. You get a thin profit margin on the product you sell. All this time, you can be sued if anyone local finds gas (oil, MTBE, etc.) in their ground water and decides you have deep pockets and can be blamed (rightly or wrongly).
Being on bone dry and in serious need of gas I told her, how about $5 in gas and thats it. I will go to another station a few miles down the road for the rest.
As an SUV driver, THIS drives me crazy!!
That’s true—no minimum amounts.
Anyway, Visa is pretty clear about prohibiting surcharging; check out page 10 of Visa’s manual for merchants:
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
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