OT: What do you think about "Credit Card Gas Prices?"

[Thomas Rogers]

The local Mobil down the road put up a small sandwich board sign that lists their CC prices. Unleaded 87 is $4.04 on that board, but on the big overhead sign the (cash) price is listed as $3.97.



I know several stations are doing this now.



What do you all think of this practice?



I don't get it, and I think it will hurt stations in the long run. I say I don't get it because I was assuming all along 2 to 3 percent of the each dollars sale was going to the CC company when I purchased with a card, and the station's profit per gallon allowed for that. As gas has gone up in price, has the profit margin gone down that much for the station owner?



Yes, I understand that if gas is $4, then that's 12 cents in CC fees. But when gas was $2 that was 6 cents. Assuming the profit margin remained the same between $2 and $4 gas, then I don't see why stations should be charging a premium for CC purchases now.



Seems strange to me.



TJR

 

[Aaron Lyon]

I think that a lot of it is a new advertising strategy for gas stations. I know one local owner who does this but he actually set up the two separate prices as a benefit for the customers. How?? Well if he is looking to make a certain percentage in profit for each gallon of gas sold then because his cost is lower for cash customers he can actually sell the gas at a lower price, on the other hand his cost for cc customers is higher so in order to keep his same percent profit he charges enough to cover the additional cost. Now I'm not saying that all gas stations with cash and cc pricing are doing this but I know that some are. I think that others are using it as an advertising ploy because most of the big signs that you see from the road will have their cash price (the lower one), this attracts you. Then once you get there and realize that it is a cash only price, how many people would actually leave and go somewhere else when their car is already turned off and they are standing at the pump. TJR in the example you gave, on a 20 gallon tank of gas a cash customer would pay $1.40 less for the fill up, once your stopped at a gas station it would probably cost you that to start your car and drive to another gas station just so that you could save maybe a few pennies.

 

[Richard Toms]

I saw this on the news about that. Said if they didn't post up the different price then they can't charge for it. Its either posted and you pay what it is, or it must be a flat rate. A station owner said, the main reason for having the different price for the CC user, is to get them to come into the store to purchase other things, other than just gas.



I was curious about one thing. I don't know how they are able to charge this premium for those who use the CC b/c, its almost like those signs at places that put up and say, "$5 min for CC". And I thought that was illegal to do.



I just don't know how they can charge for it, there isn't anything different going on for using a credit card. Its kind of like a service charge to use your bank card at a different cash machine. And when I would do this, I would get my service charge money back. Would this mean if I use my debt card as a credit card, I would get the service premium charge back?

 

[MikeSondra Grossen]

Plus they need to somehow recoop their cost by those who fill up and "drive-away." They are still out that not only in money but in their supply that they still had to purchase. I know for a fact that the monthly charges alone just to have the CC machine have taken quite a jump.

 

[Andy Chase]

When a business accepts a credit card, they have to pay a certain percentage to MC/Visa/AMEX/Disc, etc. So I think thats another part of it. I know from previous retail service that's why certain business push their CC's because when they are used, they get some money back from this percentage.

 

[Les]

There was an article about this in today's paper. In Florida it is illegal to charge more for using a credit care, but not illegal to charge less for paying cash...:blink: And to me, if the cash price is posted and the CC price is different when I get to the pump, I will go somehwere else.



What this implies to me is gas stations are making more than pennies a gallon for gas, as they claim...:angry:

 

[Jon W9]

I think it is against the CC agreement to charge extra for paying for a purchase using a credit card.



I think the loophole is actually offering a discount for cash.



I guess it all works out the same way in the end. I wonder how many people will use the in store ATM and pay the $2.00 fee in order to save $0.05/gallon on gas with-out doing the math.

 

[EddieS'04]

Here in texas by law they have to post both prices. Or post the higher price and give the discount to cash customers. They havent been doing though and the law is getting on there case. You pull in thinking 3.89 but with the card it might be 4.04. They are not telling the customers like they are supposed to. Breaking the law until the news media started broadcasting it.

 

[TomT]

I can't really blame them but they should at least accept debit cards as a cash payment. Especially with todays gas prices. Who carries around that much cash?

 

[Rob Allen]

At Petro Canada they have the Petro Points card. It's a rewards/loyalty card, you receive points for each dollar spent Petro Canada and you save $.03 a liter on gas. I have just received my Petro Points Mastercard in the mail which offers the $.03 a liter saving plus an additional $.025 cents, so when you use the Petro Points MC you save 5.5 cents a liter. Haven't tried it yet, I guess if you dont pay it off by the end of the month your 5.5 cent saving turns into 19% interest Smart on their part, just have to remember to pay it off every time you fill up or your worse off than when you started.

 

[Thomas Rogers]

Thanks for the posts.



Can anyone confirm my suspicion that the stations profit margin, per gallon (or dollar for that matter) has gone down substantially over the past couple of years?



If so, I can see why they would might want to incent cash payment, and disincent CC payments.



However, since a majority of people will want to pay with CC (or debit) card for convenience sake, I see this as a bad practice that will likely alienate more than it attracts/helps.



TJR

 

[Fudged Undies]

Got caught by this this past weekend. I was being optimistic in hoping that they were trying to cut prices a bit for cash vs. CC's. Since there's no CC fee with cash as there is with the use of CC's (and debit cards) I was thinking by paying cash they don't have to pay a CC fee and can pass the savings to the customer.... Probably too optimistic though.

 

[Ron Tobias]

I read an article that said the CC fees have steadily increased, see excerpt below:



>>>The credit card interchange fee is the biggest credit card fee you've never heard of. Nearly $2 of every $100 American consumers spend using credit cards go directly to the credit card industry through the interchange fee.



In 2007 alone, America consumers paid over $42 billion in credit card interchange fees. Even consumers who don't use plastic pay more through higher prices.



And the credit card interchange fee is set in secret - consumers don't know they're paying it through higher retail prices. Interchange fees have risen a staggering 133% since 2001.<<<





My question is, how are the high volume stations going to deal with the increased cash traffic at the registers. I live near a station (near the freeway) that has 24 pumps, full all the time. What if all those people decided to pay in cash? The payment line would be out the door, the station would have to hire more employees and there goes the savings gained by not paying the CC fees.

 

[Doctor CAD]

Where do you live that this is new? I have lived in 4 different states and as long as I can remember, the CC price has been higher.



Debit is same as cash, no additional fee to the dealer.



It must not be illegal. It is a business decision.

 

[Jim parnell]

read an article along this line about a week or so ago, article said $.04/gal profit margin was the norm, my guess is the retailer is trying to avoid the CC % they must pay, and it has gone up since the price of gas has gone up. Even heard where some CC companies were setting limits of around $80. Was in WV in May, and some gas stations were refusing CC's due to the related charges, don't know if that will hold up as you have to carry lots of $$ to do a fill up with cash. I use a CC for gas, but have not noticed the cash discount on gas, just on diesel fuel at the truck stop places.

 

[Fudged Undies]

When I got caught this weekend, I'm in Miami, FL. the difference in price was 12 cents, 4.01 cash, 4.13 credit. One heckuva difference, yeah it doesn't amount to that much but it just feels like you're getting ripped off.



doctrcad, this is the first time I've seen this. Though I haven't lived anywhere else I have driven and refueled in many states. I suppose it's possible it's been going on and I just haven't noticed or realized I've been paying more.

 

[David Ponder]

So what would happen if you pay at the pump using a debit transaction? I dont think that uses the same guidelines as a credit transaction..



SO, would you get the "cash" price if you use your debit card? (entering your PIN) :unsure:

 

[Thomas Rogers]

Doctorcad,



I live in southeastern PA (northwestern 'burbs of Philadelphia) and this is just starting here. I have heard this was coming, and is more commonplace elsewhere, but in my local area there is only one station of at least a dozen that is doing this.



If 4¢ per gallon profit margin is the norm for gas, then I guess I can understand this.



But again, why is this NOW becoming more widespread (that's my assumption that it is)? Has the profit margin really shrunk a lot the past two years?



TJR

 

[Jim P]

i worked at a service station while in high school, the owner said he didn't make much money on gas sales, but his real profit was the grease oil and filter work we did, even back then the mark up was substantial/profitable. He sold the gas to get people to come in and do one stop shopping. Dave; I have heard/read that if you use a debit card at a gas pump, they (the bank) will put an automatic hold on your checking account, sometimes in excess of your purchase amount, which could cause you to bounce a check if you're running close. Check out msnbc.com and search for CC related gas pur;chases.

 

[marsha marke]

you should check with your local laws, here is Alaska is it against the law to pass the credit card fees on to your customers, and any company found to do that stands to loose it privileges to accept credit cards. i know this because that is what we were told when we started accepting cards at our restaurant.