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Cash vs. Credit Card: Gas Stations Charging Different Prices

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I noticed something disturbing last night. I pulled into my favorite low-cost gas station, which happens to be Valero. It’s my favorite simply because it’s the least expensive in the area and it’s right on my route home from work. Apparently they have begun charging 6 to 8 cents more per gallon for payments with credit cards than they are charging for payments with cash. This is a very new development, as the last time I filled up a few days ago, this was definitely not the case.

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I didn’t look at the pump until I gave the attendant my credit card and he began pumping. (New Jersey is still a full-service-only state.) There was nothing on the large sign that indicated that there was now a price difference between credit and cash.

Valero gas pricesThe price difference practically wipes out the cash back bonus I’d receive by using my credit card with rewards, so it will now be more difficult to determine which method of payment will actually cost less in the long run and which gas station to use, as prices vary daily.

I thought it was against the terms of service of a merchant account — and possibly against the law — to charge different prices for cash and credit or to add a surcharge for credit card purchases, all else being equal. Here’s how the stations apparently get around this issue:

Now we all face dual pricing, and as was the case when the practice first popped up, to comply with the law, the pump price has to be the credit price from which the cash discount comes.

But the price advertised on the big signs that draw people to the stations is the cash price. That is misleading. According to North Jersey Media Group, gas stations are “forced” to adopt this policy because merchant fees eat into their profits. I understand that individual stations are put in a squeeze when prices are increasing. Understandably they want to pass that cost onto the consumer without pricing themselves out of competition.

As I’ve been following prices practically day to day, it’s clear that when this was initiated at the stations within the last few days, the cash price is the one that followed the trending line and an extra surcharge was added to the credit card prices. Nevertheless, they can still consider it a “discount” for cash purchases. The regular credit card price should be the one advertised on the large signs, not the discounted price.

Updated December 10, 2013 and originally published June 21, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 298 comments… read them below or add one }

avatar Archibald Gillespie

Check out this situation:

I leave a softball game and I’m thirsty and low on gas. I stop at a gas station, I pay at the pump with my credit card, no qualms. I go into the station to buy a drink with my credit card and they say I can’t pay for that with a credit card. I left the drink on the counter and walked out as the attendant asked me to put the drink back if I’m not going to buy it :)

So I can spend 30 bucks on gas, but then they don’t allow me to buy a drink, poor customer service. Here’s my question:

Does it hurt the gas station if I swipe my credit card and pump in $.50 worth or less of gas and then end the transaction. May even do that over a few times over???? If so, this may be a good way to fight back ;) Especially a good way to get back gas stations that charge extra for credit purchases.

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avatar Nj

Its not a good way to fight back but its a good way to get your credit card blocked though. Everytime some body swipes a card it cost the store about 10cents to 20 cents plus 1% to 2.5% of the amount of transaction as fee. So sometimes its just not worth it for stores to run a credit/debit card under certain amount.

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avatar bumperhanger

As a store owner I know how little profit margins are. Gas is the most expensive cost to stores and the least profit. At $3.50 per gallon it costs $28,000.00 dollars to fill a 8000 gallon tank. Add .08 cents average markup which equals $640.00 gross profit on $28,000.00 dollar investment. That is 2.24% gross profit margin. Then you have to pay a cashier, power to run pumps, upkeep on pumps and dispensers which is expensive when lightning strikes and breakdowns. Then the credit card companies take 2 to 3 % of the $ 3.58 per gallon of gas. $3.58 x 10 gallons = $35.80 = .80 cents gross profit to store for a cash sale. Credit sale of $35.80 – 2% fee of 71.4 cents plus .19 cents charge per transaction fee = .90.4 cents total credit card fees which gives the store owner a .10.4 cents loss on the sale to give you the privelage to use you credit card. Do you go to work and pay your employer .10.4 cents or more for the privelage to work for him, or does he pay you? If stores cannot make a profit, they cannot stay open. Then where will you get you gas to go make your money? Be considerate if you want items inside on your card, go in first get your soda and prepay for your gas on same transaction where the store wont loose his . 25 cent profit on the soda on another transaction fee of .24 cents for a dollar item..

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avatar Howie Frank

I used to own a gas station. You could not have said it better!!! The public is so uninformed. They don’t realize that someone has to pay for all those perks or points or cash back they receive for using their credit cards.

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avatar Brad

As a consumer I use credit cards as a convenience and as a stop gap against fraud (debit cards put me more at risk), and cash is not convenient at all at the pumps. Most of my gas is purchased at either Sam’s Club, Costco or a supermarket that also sells gas. In my opinion the retailers want my business in order to hopefully get some inside the store sales as well; they in turn do see good profits from this arrangement, and it is convenient for me. But recently the supermarket started charging more for credit card gas purchases. And it is it is not that they lowered their regular octane price to compete with say ARCO’s cash only price; they raised the 87 octane price on credit cards. Now this retail store, which installed the fuel pumps as a “lost leader” anyway in order to draw more customers and thus attain a higher profit margin, is now loosing customers to both other budget big box chains AND to budget cash only fuel chains like ARCO (lower cash only price).

I find it ironic that all these filling station owners are upset about the credit cards only now after the new regulations on credit post recession. But a few years back when the credit card companies were having high times and offering both consumers and retailers incentives to use their cards at gasoline retailers, there were fewer complaints about the business model. I can sympathize about retail owners and their frustrations in their need to make a profit, but as a consumer who needs to find the best value; don’t blame me for wanting to use my credit cards AND get the best price. The answer for retailers is as it has always been: offer a competitive price (maybe not the rock bottom lowest price), and balance that with good service, clean bathrooms, convenient products and a safe well lighted filling station. You need to do your job better and compete for my business; I don’t need to fit your expectations, or be made to feel guilty for the ” privilege” of using a credit card. If you want the “privilege” of loyal customers; start seeing it from that perspective first.

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avatar David Brand

Its “losing” customers, not “loosing” customers. But i agree with your comment.

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avatar Melani

I would like to say, “Here, here…2 cheers for the comment from Brad. I couldn’t have said it better myself.”

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avatar godiva de maus

Quite a few historical inaccuracies. Years back merchants were up in arms about extremely high merchant processing fees (charge through) fees they had to endure. They lobbied Congress and were able to get quite a few concessions, namely, charge through fees have been capped AND merchants are able to (where not outlawed by state law) pass on some of those costs to their customers. In the past, the merchant contract(s) with MC and VISA only permitted the merchants to dual price, that is, they could offer a discount for cash purchases, but they could not charge a “transaction fee” unless the purchase was under $10. Now, credit card purchases can be subject to a transaction fee under very defined circumstances (except when barred by state law — there are 10 states that have outlawed this). These circumstances include: 30 days prior notice to the card company of intent to charge transaction fees, 30 days posting on exterior near where the decals of card acceptance are (with even size requirements on the signage) and interior 30 days prior to actually charge any transaction fees, and Debit cards ARE NOT permitted to be charged any transaction fee and Debit cards, Cash and checks are all to be treated exactly the same in terms of pricing (it is permissible to charge a transaction fee on debit card purchases for $10 or less). Anyway, these changes really haven’t anything to do with the recession or recovery per se. These were lobbying efforts that started long before Congress passed the law changing the rules. The most recent change with regarding to permitting charge through fees/transaction fees to be passed on went into effect in January of 2013.

Curiously, there are some merchants who claim to be able to get around the whole prohibition on passing on transaction fees on debit card purchases stating that their financial institution system only will process the charges as “credit.” Trying to track down whether or not this is legal or not and what entity is responsible to enforce it if it is not is like following the Minotaur. It seems every agency points to another agency and entity. Going to the consumer Financial protection agency for answers yields the maddening “maybe.” I worked for a major bank credit card company for almost a decade. My understanding is that our merchant agreements do not permit merchants to say “we’ll only take credit” — because VISA and MC have a vested interest in debit purchases being accepted “anywhere the credit cards are accepted.” My guess is that someone is going to end up filing some sort of a lawsuit that will, ultimately prevail as proving it’s an unfair practice and they’ll be some form of class action settlement… (which will really just enrich attorneys and the rest of us will get checks in the mail that are almost enough to buy a latte. Still, I’d like to see it.

So, while I’m sympathetic to your viewpoints regarding why you use debit and comparing the shortsightedness of some add on gas pumps for chains to not maintain competitive pricing… I completely agree with your observations. I just had to point out that your assumptions regarding the hows and whys of some of the changes didn’t line up with the legislative history. Hope this helped.

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avatar Mike in LA

As someone who lives in a town where filling stations don’t take non-oil-company credit cards, I’m greatly amused to read from ostensible adults who whimper because retailers won’t pay their bank fees.
I buy gas with cash because I have no choice, and it’s no great inconvenience.
But then I grew up using only cash, so it’s not a novelty to me.

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avatar Rob S

You must be a business owner. If not, you are the smartest consumer I have ever heard speak. As a gas station owner, I try and explain this to consumers until I am blue in the face, yet it’s like I’m talking to a wall. This practice is putting small, local business owner under, and letting the large corporate retailers win the battle. What happened to supporting your locally owned business and the local community?

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avatar David Brand

Thats a bunch of nonsense. Society as a whole is moving into not carrying cash anymore. It seems that businesses in general are seeing a way to profit off of that even more than they are already.

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avatar JACK CRESS

RIGHT ON BROTHER. AS A GAS STATION OWNER, IT IS HARDER TO OPERATE AS THE PRICE OF FUEL GOES UP BECAUSE OF THE CREDIT CARD FEE WE HAVE TO PAY. YOU ARE RIGHT ON.

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avatar Everett Peavey

At a branded station (Exxon, Shell, etc) the oil company may absorb the credit card fee for the transaction where the gas was paid for at the pump (self service) because the store never actually handled the credit card. Not sure who this applies too, but I know it does not apply to the independent unbranded gas stations, who can have slightly cheaper gas because they can shop around for each delivery. However, as we saw in 2005 after Katrina & Rita the branded stations had a supply where several unbranded (no contract) went dry.

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avatar consumer

Here’s another way to fight back. If everyone started paying with small bills cash would become a major setback for the owners. First, as 90% of customers would pay cash the station customer turnover would dramatically decrease (takes much longer to pay cash than to swipe a card). Second, watching all that loose cash would become expensive for the owners. I’m surprised no one talks about the cost of using cash vs. electronic transfers between accounts. Do you remember when in late 90′s gas was $0.99 or less per gallon in some states? Well, the owners didn’t complain about credit cards back then. SHELL was promoting their credit cards with 5% discount on gas and 1% on everything else. What happened now when gas is 3-4 times more expensive? When prices were skyrocketing they were still quiet about “fees”. Now, as prices started dropping suddenly there is a problem? Suddenly, the business models failed to incorporate price fluctuations? What were they thinking that the prices would keep on going up forever? In my area there is one SHELL station that still charges same low price for credit cards. Guess what, they are always busy at those pumps. And with so much activity there is also action in their food store where they make most of their profits on high markups.

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avatar Rob Suggs

You are completely clueless. Retailers never got incentives from credit card companies, ever. Only cunsumers ger “rewards” from credit card companies because they make trillions at the exoense of the business owners. Also, that whole bogus law the liberals passed did nothing to save retailers money, as there are huge loop holes in the Durbin Act. It, s been a year and my $50, 000.00 per year swipe fees hav not dropped a dime. The whole point is that why do business owners have to pay for consumers choice of payment options? We didn’t make the choice for you, yet we take thepunishment. In my opinion, credit cards have ruined society. Consumers spend money they don’t have because you can jusg chage it with a little piece of plastic, and swipe fees are putting small business owners out of business. The only ones coming out on top of all this is the big banks.

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avatar Rob S

Sorry about the mistyping. I was on a cell phone at the time.

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avatar Consumer

Rob Suggs,

Stop taking credit cards and save that $50K a year…. now you take the choice away from the consumer and put it in your hands by only taking cash…..now see how that will work for you.

You will lose way more business by eliminating the use of credit cards then it costs you in the yearly fees when you take in consideration your total sales not just your fuel sales.

We are pretty much a cashless society and those that still deal with cash are mostly those that can’t qualify for a credit card. Yes, I know there are still those credit card holders that use cash but they are fewer and fewer out there.

The bottom line is that businesses (large and small) need to accept credit cards and they should price their merchandise and fuel to make a profit regardless of which method the consumer uses to pay.

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avatar godiva de maus

Not to mention that the transaction fees ARE a business cost that when you file taxes reduces your taxable income, just like advertising fees, employee wages, insurance fees, property taxes for your business, etc. Personally, I would like to see the IRS follow up to see if these stations who are passing on the charge through fees to their customer AND are claiming those same costs against the basis of their gross income.

Not to mention the rules that changed in 2011 and in 2013 actually created an environment that was MORE favorable to the merchants rather than less, placing caps on interchange fees for debit card processing, requiring financial systems to permit you to have a minimum selection of processing any transaction via the cheapest method of no less than two systems (they are not permitted to lock you into one processing system, for instance). Yet, I’ve seen MORE griping from the merchants not less.

I find this mystifying.

avatar Asif

I used to hear from my boss: “you make more money than I do here.” However I pump gas and he owns the business :) And that’s true. whatever he can make he make from repair shop and from a snack shop :( I feel sorry for him.

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avatar Margarita Quintero

I just want to know how come I can pay with a credit card at the 99 cents store?

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avatar Smarter than you

You’re not very smart. Let me make that clear first off. 2nd a Gas Station makes basically nothing from your $30 in gas. Let’s say gas is @ $4 a gallon, your $30 in gas made that gas station a whole 0.375 cents. Congratufuckinlations. Buy a small bag of chips for a buck, they’ll make more on that.

On the 2nd note, credit cards charge up the ass, if the gas station is only making .05c per gallon, which is quite average, try taking into account the credit card transaction fees, which could very well be like 3% + .05c per transaction. Now the gas station only made 0.31375 cents. It’s simple math. They have a discounted price on cash, because they can afford to.

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avatar PumpMan

Low pay, no benefits, bad working conditions, safety violations..If you don’t mind these things then come work at WaWa…It’s time to unionize the Gas Associates..Employees need to organize so that WaWa will be required to follow the Law..Help us Organize at WaWa..Have the Teamsters or other unions contact us..thank you

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avatar NoDeceptiveAdvertising

This is a deceptive practice at best, and one I ran into for the first time today. The price posted on the board was evidently the cash price, but noted only in very small print. I did not notice the price at the pump was 5 cents higher than was posted on the board until after I had filled up. Only then did I see the additional small wording on the pump that said a 5 cent discount applied to cash transactions only.

I plan to pump exactly 1 gallon of gas from this station a few times a week from now on. Let’s see how they like a taste of their own medicine. I can’t wait to see if they try to slap minimum charge requirements on to discourage me. I’ll take great pleasure in turning them over to Visa/MC at that point.

Be honest and upfront with your pricing merchants! If you are advertising a cash price for your product, make sure the customer can read it before they purchase!

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avatar rob

Your station is not trying to be deceptive. I agree that the cash signage should be properly displayed. When you use your credit card, the gas station is charged 3% handling fee by MC or Visa. Higher for AMEX. When gas was 2.00/gallon, that was 6 cents. With gas now at 4.00/gallon, that is now 12 cents. What hasn’t changed is the gas station’s profit margin. Most stations don’t make more than 12 cents per gallon. If you use your card, they make nothing. Giving you 5 cents off still lets them make 7cents. Gas pricing is a penny business. Thats why they all have convenience stores. They make more on a half gallon of milk than filling your tank.

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avatar godiva de maus

As of Jan 27 2013, the merchants can have transaction fees added to credit card charges but NOT to debit card transactions over $10. They may have a discount price for cash transactions, but it has to actually be a cash discount, not simply a fee added atop a debit card charge, if they are “adding” at the cash register for using your debit card, that is a violation of the law in 10 states and a violation of the VISA/MC debit card merchant agreement in all states.

That being said, as of January of this year, the merchants can charge transaction fees on credit card transactions BUT they must notify the credit card company 30 days in advance of their moving to this policy and they must clearly post outside their establishment prominently of their policy and exactly what those charges are (as well as inside the store and at the checkout).

Also the fees they can charge on the credit card transactions went up this year.

The real issue is the merchants who continue to do the same for debit card transactions, which have a much lower and capped cost for them and to add a transaction fee is a violation of the merchant agreement and against the law in 10 states.

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avatar godiva de maus

We have a merchant near me store plus gas that charges a fee to use debit cards (although it violates their merchant agreement) they’ve posted a “cash discount” sign (after having been reported) of .35 to use debit cards, but in reality, if you pull out a debit card they “add” .35 to your bill, it’s not subtracted when you pay cash. They are convenient to me and substantially closer to my house than any other store. But after they insist upon charging transaction fees and fail to adhere to even the spirit of the loopholes provided I don’t ever shop there, ever. Now, I calculate on a daily basis (since it’s near my rural home) they probably lost at least a few dollars every single day from me. I’m guessing they figure that they can stand to lose those dollars, otherwise, why do it?

It’s not a branded gas station, it’s a po-dunk little store in the middle of wherever. Their gas prices are ALOT higher than their competitors (as I would expect) their goods are more expensive (as I would expect) but those are not reasons for me to cease doing business with them. Debit card transactions are.

I’ll drive miles simply to avoid doing business with someone who put a bad taste in my mouth. They did and any other merchant who behaves the same way will get the same reaction from me.

Done.

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avatar Ryan

Well that’s prefectly fine. I always take my business to a gas station that does not charge more for credit. And I also tend to buy my “half gallon of milk” there, among other things. My loyalty is worth more to them than the 12 cents it might cost them to process my credit card transaction. And they get my business in return. Customer loyalty = profit. Good customer service = loyalty. Everyone wins.

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avatar GloryBee

I just turned in a gas station just south of New Braunfels, Texas for advertising two different prices. Here is where you complain to MasterCard:
http://www.mastercard.com/us/personal/en/contactus/merchantviolations.html
(Thank you Matt!) Sadly, they want the full name and address of the offending (and offensive) retailer, so make notes. Check mark the “The merchant/retailer is adding a charge for using your MasterCard card.”

OK, guys and gals, where do I complain to Visa Card and Discover Card?

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avatar jack tabibian

INSTEAD OF COMPLANING TO MC/VISA OR ANY OTHER CREDIT CARD COMP. ABOUT RETAILERS….COMPLAIN TO THEM ABOUT WHY THEY CHARGE RETAILERS SO MUCH FEE’S…AND WHY THE CHARGE CREDIT CARD HOLDERS SO MUCH INTEREST AS WELL…WHAT A RACKET…GET PAID BOTH WAYS…IT’S LIKE AC/DC

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avatar BeHappy

If you want the discount carry cash for goodness sake! Some companies like the one I work for pay 5% fees for running a card…I said the company pays this NOT you. Get over it!!!! Companies shouldn’t have to pay for your laziness to go to a bank. Get to know the person that works at the bank…yes there is a live person dealing with money. Carry some cash help a small business make some money for once.

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avatar Chris Krollage

If they don’t want to pay the Fee to the CC companies, the gas station should go cash only and do away with pay at the pump. But the real problem I have and many others is not the difference in price, but the fact that they advertise on the sign the cash price and only after you already parked and started to get ready to pump there is the little sign that tells you cash and credit pricing in effect.

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avatar consumer

And the government pretends not to see that illigal practice. They pretend that it is a “discount” for using cash off the regular price with a credit card. If that were true, then the big sign with prices should display the regular higher prices not the discounted ones.

avatar Ian Rogers

Do these same merchants charge a credit price or give a cash discount of you purchase a gallon of milk with a credit card?

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avatar Kris

I agree with you entirely! This reminds me of people complaining about the guy in front of them on the airplane reclining his seat…why do the airlines jam as many seats as they do, making it impossible for some people to put their seats upright?

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avatar godiva de maus

I feel your pain… but let me play devil’s advocate.

The credit card company is being paid a fee to process your payment. The idea here is that they are loaning someone money so they can spend money in your store. Merchants figured out a long time ago that extending some credit meant that people would “even out” their buying so that merchants don’t have huge boom and bust periods… Basically the credit card company is being paid by the merchant to help them maintain an income flow.

The customer is paying the credit card company interest on the loan.

The Merchant doesn’t have to expend any legal fees, court costs or risk “charge offs” when the customer cannot pay their bill. I realize that as a business owner, it may feel like you’re being subjected to a a racket. But I wonder if you would feel the same way if you felt that you personally would have to extend the credit to keep your revenue even… and, when someone doesn’t pay you, you’d have to put out the legal fees, the process server fees, the court filing costs and.. when someone files bankruptcy and discharges your debt… you lose out completely? Compared to this scenario, the interchange fees feel like a downright bargain, no?

Then there’s the whole matter of the interchange fees being a valid business expense that is deductible from your gross profits, reducing the basis upon which you pay taxes. Deductions are things that we as a country have figured that we’ll extend as a matter of policy because of some concept of equity or, a policy that we’ve considered is beneficial. I have no argument with this concept at all. But let’s not kid ourselves by thinking that deductions are not a cost to the taxpayers in terms of reduced revenue that must, as a matter of course, be made up elsewhere.

So, when a merchant passes through a cost that they are entitled to take as a deduction from their gross income for purposes of reducing their tax liability… it feels to me like double dipping. I get to pay fractionally higher taxes because of the loss of revenue due to the deductions that are extended to the businesses AND I get the joy of having those same costs passed on to me in the form of “transaction fees.” To add insult to injury, many times the quoted transaction fee is actually more than the fee the merchant ends up paying… so, the difference between the two is an added revenue to the merchant, besides.

So, really, I get a little bit tired of the merchant gripe/complain/whine situation. I get that the margin of profit for a branded station is likely razor slim, but that is NOT due to the interchange fees, that is due to the pricing structure from the large oil companies. Perhaps getting into a different business altogether might be a really great thing to consider.

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avatar Nj

visa and mastercard dnt care the price difference , because they charge a large fee from the retailer everytime these cards are used at the store.

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avatar Rob S

You can complain until you are blue in the face. It is not against the law to offer a cash discount.

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avatar GloryBee

I just got off the phone with Discover Card 1-888-DISCOVER (1-888-347-2683) and apparently they don’t care if there is a difference in cash vs. credit card prices. At least according to the lady I talked to.

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avatar ROBERT OBERNAUER

Nobody is charging more for credit cards, rather it is a discount for cash. Nothing the credit card companies can do about it. Not even something Obama could do about it. I started this 10 years ago, fought off the credit card companies and the state department of weights and measures and consumer afairs, and I won at every stop. If the credit card companies were fair to the retailers, we wouldnt even have this blog going.

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avatar Luke Landes ♦127,490 (Platinum)

In my observations, it’s the cash price that is the price competitive with the other stations that do not discriminate. You can call it a “cash discount” if you want, if that keeps Visa and Mastercard from revoking your merchant agreement, but you’re not offering a break to those who pay cash, you’re charging a premium to those who use credit cards to make up for the high merchant fees. I do feel bad that Visa and Mastercard have backed merchants into a corner… but that’s not the customers’ problem. Group together and fight the merchants for a fee system you believe is more fair, lobby the government for more oversight, or find a different business with a better profit margin.

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avatar Kris

Ban together to fight the merchants who bring consumers what they want??? Really? How about asking the credit card companies why they have to charge both the merchant and the consumer?

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avatar Rob S

Amen! these consumer bloggers are pissed off at the business owner, when the credit card companies are the root of the problem. Making profits at both ends, the consumer and the business, all while making billions every year and smiling all the way to the bank.

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avatar godiva de maus

See earlier comment. I’m really sorry you do not understand the basic principles… but, the merchant is charged an interchange fee for providing a revenue service… this is a service that permits the merchants to maintain a regular and less fluctuating revenue flow… without having to extend the credit themselves (like old time mom and pop places used to have to do) and assume all the risks of collecting on that extended credit, the legal fees, and the risks of loss if the debtor defaults completely or discharges the debt in bankruptcy. The credit card company, therefore, is providing a service to the merchant.

The customer’s relationship to the credit card company is a simple borrower to lender relationship. The lender extends credit, the borrower pays interest for that debt.

So the REASON for both these entities paying the credit card company resides in each party has receives a different and unique service. It’s like if you worked for two different employers… you’d expect each to pay you for the service you rendered. People would think it entirely laughable if someone where to exclaim as though it were somehow “unfair” that you should expect to be paid for the services you provided from each of your employers! The nerve!

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avatar Robert Obernauer

In my case, my cash price is cheaper than anybody elses credit price, so i cannot speak for others. Visa and Mastercard haven’t backed me in a corner, I have backed them in a corner. I am keeping them from getting away with robbing from merchants like myself, by encouraging there customers to put away the cards and pay cash. It IS the customers problem. Consumers are constantly looking to everybody else for solutions, but themselves. With your philosophy, how is General Motots, Chrysler, Bank of America, Citigroup, AIG and others my problem? The answer is that it isn’t, but their problems have become our problems–so why shouldn’t the high credit card fees I pay not become everybody else’s problem? The last thing that I want is for the Government to get involved in my business. Can you imagine Nancy Pelosi and Barach Obama regulating gas stations and merchant fees??? By charging more for credit cards (which I don’t deny doing), I, along with many others, are solving a problem for ourselves, without asking the Government for help. How can we ask for a more fair system from the credit card companies if they have a monopoly? They are the ones in control, and the ones who can make a system more fair. As far as profit margin, mine is healthy. I am a millionaire, and I want to make and keep as much money as possible, which is why I live in a capitalist country and society.

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avatar Archibald Gillespie

Since you’re probably not a natural born citizen, you don’t mind the government getting involved to provide you with tax breaks.

Don’t worry, you and others charging extra to use credit is not a problem for me as long as I can go to a Speedway, Meijer or other non-credit charging station.

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avatar patty

It is all about greed isn’t it. Screw your neighbor is the american way.

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avatar Andy Rogers

My beef is with merchants who put out big sings advertising their prices WITHOUT noting anywhere on the big sign that it is a cash-only price. That’s misleading advertising.

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avatar Mike in LA

Just a reality check: Nancy Pelosi hasn’t been Speaker for some time. It’s John Boehner.
But back to the topic, the underlieing (misspelling intentional) story being presented here is about a battle between consumers and small business owners.
In fact both are screwed six ways to Sunday by the Banksters and Big Oil.
Banksters paid off pols of both parties to have usury laws repealed so they can bleed credit card customers beyond the dreams of avarice, while nicking retailers with swipe fees.
Big Oil has done all in its power to eliminate independent retailers, while taking enormous welfare checks from the U.S. Treasury in years of record profits.
America used to do a reasonable job of looking out for the little guy at least some of the time, but during my life that has changed.

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avatar Robert Obernauer

Actually I am a natural born citizen (4th generation by the way). I don’t want tax breaks from the government-I want capitalism to flourish. I want welfare done away with as well as all of the other government social waste (and I dont want to hear about the 3% of people that get welfare who actually deserve it). And FYI, I’ve never seen any person at a speedway without a turban on. The beauty of being in a free democratic country is that you can go anywhere you want for gas. By the way, I am the highest volume gas station in the area, and the main reason is that I have a large sign that says “AMERICAN OWNED AND OPERATED”. If Americans stopped using credit cards, it would dump TRILLIONS of dollars each year back into our economy. If you look at China, you will see that people there seldom use credit cards, which is why individuals are not in nearly as much trouble in this recession as Americans are.

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avatar Chris Krollage

Do you advertise the “Cash Price” and have a clearly legible sign that can seen from the highway that say “Cash Only Price”? By the way, this is a Representative Republic, not a democracy, it says so in the US Constitution and even in the Pledge of Allegiance.

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avatar Rob S

Robert, as one of the few Americans that own a gas station myself, your comment made me smile.The truth hurts, and the lemmings don’t want to hear it. Much like all liberals, they want others to pay for their lifestyles.

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avatar godiva de maus

WOW. 4th generation. Really? I don’t even know where to begin with your post. So, basically you don’t mind all the business and other “welfare” being eliminated like: mortgage interest deduction (yup, it’s a government give away because government decided it was a good thing for people to buy houses) or, how about the business costs deductions for wages, insurance, property costs, costs for facilities and overhead… those too are drains upon the tax base and they too are a form of “welfare.” Don’t preach to me about how most businesses are actually deserving of such things or how as a policy how much benefits they pump back into the system… I’m taking you at your word that you don’t want any of these “give aways.” Can’t even get my head around your whole “turban” crack. Wish I knew exactly where your business was so I could make sure that this sort of xenophobic and frankly, racist comments by the owner could be broadcast. Being American is something that resides in Ideals… none of which involve the sort of commentary you’ve engaged in. However, I COMPLETELY agree with your absolute right to encourage your customers to put their cards in their wallets and use cash at your station. You have a one hundred percent right to offer discounts for cash and you’re obviously an astute business-person on this score. I prefer to use debit cards for safety and security. But I can completely get behind your view on the cash discount, regardless of whatever my personal preferences are with regard to debit v. cash.

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avatar Alec

Yeah this is now happening in Michigan also, I’ve noticed it at Bp and Mobil. Now here is the kicker, Mobil was charging 10cents more per gallon if you used a credit card, Bp was charging 20CENTS A GALLON MORE if you used a credit card. Now how the $*&# is that legit, I’m sorry its not. Bp go to hell! Something needs to be done about this. Oh and a comment on the signs they put reg cash, reg credit, then premium listed out so it looks like reg-mid-premium, VERY unclear. Just one more way they make the consumer bend over, how will they change the economy if they just charge us more for everything, don’t they realize that in doing that we CAN’T buy stuff? Stop bailing out corporations and bail out the consumers, DUH….. am I the only person who sees this? lol? For example: The Big 3. I NEED a car but cant afford one, ironic?

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avatar nacny

What’s the different it make from Gas station listed Gas w/car price 20 cents cheaper than Gas w/o car wash, then premium. I ‘ve seen gas station listing that price that way forever. It’s just cash VS credit. Gas stations pay high credit card fee and they can no longer absorb cost. I will keep using credit card at the pump, until Cash back or mileage reward no longer make sense for me. Stop screaming, go somewhere else. Spoiled consumer.

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avatar Chris Krollage

I’ve seen the car wash, and those places say so clearly on their sign as required by law. Stating discount with Car Wash. the Cash Pricing Signs are usually much less conspicuous.

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avatar Chris Krollage

I love when they put the grades in odd orders so if you don’t read the pump clearly you end up pumping 93 instead of 87 for a vehicle that doesn’t need premium. I’ve seen it where its Premium, Regular then finally Mid-Grade.

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avatar Becky

Only 2 of the Big 3 were bailed out Ford did it all on their own

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avatar Robert

I went to an Exxon today in Hibernia, just off Rt.80. The cash price for regular was $2.65 as listed on the sign. However the credit card price for regular was $3.19. I was stunned when I realized this. I will never ever go to any Exxon again. I can by a pair of pants from a struggling retailer with a credit card, but a company with bulging profits like Exxon wants more of my money to make their business easier.

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avatar Rob Suggs

You are not a very bright person. Exxon hasn’t owned a gas station in over a decade. All Exxon’s are owned individually and have struggling owners like every other small local business.

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avatar Fenton

Its the credit card companies that are shafting us all. The gas station is doing the right thing. We should pay less if we are using cash. If we don’t make explicit the gouging the credit card companies are doing then we’ll continue to line the pockets of an industry that rakes in the cash for doing basically nothing. Personally, I’d like to see a system where we have cash cards…we fill them up and use them with no fees to the merchant or anyone else. The company who sets this up makes a killing on my card balance, as it’s literally an interest free loan. They do this in Hong Kong with the Octopus card…and I’m sure that if anyone tried to set this up anywhere else that the banks and credit card companies that live high off the hog on their service fees would quickly get their lobbyist buddies to make it ‘illegal’ somehow.

Being indignant about paying a higher price for using a credit card is just ignorant about the facts of what is happening…wake up folks! Reality is knocking! There ain’t no free lunch!

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avatar bPoint

Indignant?

It seems that gas stations are the only place that play this game of cash v. credit pricing. It does not happen inside the gas station. If I go inside the convenience store of a gas station and buy a soda and sandwich, the price is the same whether I pay cash or credit. So most of us are wide awake, and this cash v. credit for gas is a unique and terrible behavior acted out only at gas pumps.

Indignant, of course we are.

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avatar JOE

I OWN A GAS STATION. WHEN PRICES WERE OVER $4.00 A GAQLLON WE ACTUALLY LOST MONEY IF A CUSTOMER USED AN AMERICAN EXPRESS CARD. DO THE MATH. 25 GALLONS COST US ($100 X 3.25%FEE=$3.25 ON 25 GALLONS OF GAS AFTER PAYING THE TAXES WE MAKE 25 X .12= $3.00. DOESN’T SEEM FARE TO US EITHER BUT WE HAVE TO CHARGE MORE FOR CREDIT TO SURVIVE. AS FAR AS INSIDE THE STORE SALES, WE MAKE A GREATER PROFIT MARGIN ON THOSE ITEMS(COFFEE, SODA, ETC) SO WE CAN ABSORB THE CREDIT CARD FEE.

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avatar Rob S

If you weren’t so ignorant, and read the above posts, you would have realized that the profit margin on gas is 2% if you’re lucky. The margin in the store averages around 20%. That is why the upcharge for credit card is taking place on gas only. Most stations lose money if they don’t charge a fee for credit card gas purchases. Try and become educated before spouting off at the mouth.

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avatar Torrence

Rob what I find to be very interesting is that you constantly talk about profit margin and how little it is for business owners and how expensive it is. I also saw that you metioned that you had to pay $50,000 is fees to the credit card company for one year. I have also read about how ignorant you say people are about this issue. However, I think the fact of the matter is that if your business was not making money then you would not keep doing it. Let me tell you that anyone who can outlay 50K in fees is doing pretty well. Thats almost more than my salary and I have two degrees. Therefore, I think that the general public just do not feel sympathy for gas station owners. If I am not earning enough to support myself you would tell me to get a different job. Thus, if things are really that bad then go into a different type of business. There is no such thing as a non-profit gas station, so I am sure you are in business to make money. If your business was so bad you would change. I think people who handle large quanities of money may forget the reality of others people situations. $50 for a tank of gas may be nothing to you but $50 to someone who only earns $200 a week would be alot and anything extra to that is even more of a burdend. So I think you should be a little more empathetic with your comments and count yourself and all other gas station owners fortunate to be able to even spend 50K in fees. Also just a little background, my step-mother and her parents owned two gas stations, and they worked hard, but they owned their own houses (several), bought whatever kind of cars they wanted, and could pull out money anytime they needed it, and I didnt know many other people who could do that. So, be thankful for what you have.

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avatar Becky

We do have cash cards their called debit cards but the gas stations still charge us for those like their credit cards. I don’t use a credit card, only my debit. That way I never spend what I don’t have but I still get screwed at the pump just like a regular credit card user. And if I’m not mistaken the banks are no longer allowed to charge retailers for swiping debit cards the way way credit cards are.

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avatar Rob S

You are mistaken Becky. Read the Durbin act entirely. It will take a while to do so, but the banks have an out for complying with the law, and yes debit cards are around 1.6% on the dollar and a 10 cents fee on top of that.

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avatar Noshi

Easy solution. Make the CC companies pay higher rebates! 5% rebate on gas would get rid of the issue :)
I love CC since if you are only using it like one would use a debit card it’s free money (for the consumer at least). I wanted to report the stores I know of that blatantly add a charge or have minimums for MasterCard but I don’t want to risk in messing with stores that are the only known within a couple of miles radius that are open at 6am with sin taxed drugs (especially spirits).

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avatar jack tabibian

DEAR SIR…THE OWNER OF THE STORE WILL HAVE TO PAY FOR THAT INCREASE..

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avatar GasMan

I am a independent gas station owner in South Carolina. Credit card swipe fees are killing us! gas is now at $3 per gallon. To be competitive, my margin is 10 cents per gallon. Swipe fees average 2% per total sale. At $3 per gallon, the credit card company makes 6 cents per gallon and I make 4 cents per gallon. They do absolutely nothing for my business, I absorb all of the operating cost, payroll, electric bills, equipment, etc…. My swipe fees totaled more than 50 thousand dollars last year. That is why there should be a different price for credit card use. The consumer gets rewards for using their credit card but the gas station pays for those rewards because they get charged a higher swipe fee percentage, the credit card company doesn’t even absorb the rewards cost, they pass it on to me. There is no profit to be made on gasoline for the station owner like everyone thinks, I actually loose money on gas now that most people pay at the pump because those people used to buy something in the store to help make up for the loss on gas. Credit cards are contributing to putting a lot of small businesses out of business. They are convenient, but I hate them!

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avatar Nicole

I would be happy to make purchases inside the store with my gas purchases if only it didn’t require multiple trips into the store. Most gas stations in my area require that you leave the credit card at the counter then go pump your gas, return to the store and complete your purchase. If you would let me swipe my card for the authorization at the pump, then go into the store to complete my purchase, I would be happy to buy my soda and snack from you. This is the same reason I don’t use cash for gas purchases. I have to enter the store, leave my cash, then return for my change. I don’t trust the cashier to keep track of my cash or my credit card because they have too many other responsibilities. And let me be clear – this is most definitely not a judgement of the cashiers character, only the problems with requiring employees to multi-task.

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avatar Rob S

I personally appreciate a customer that uses their credit cards at the pump and then comes into the store for other purchases. I had to implement a $5 minimum in the store for credit card purchases though. many customers would charge an item for $1 and I was losing my arse. The swipe fee on $1 is 28 cents. Like I said, losing my arse. I may sound like an A-hole, and maybe I am, but I am just trying to educate the consumer on what actually takes place in the gas station business. Most of us are local owners trying to scratch out a living. We are by no means millionaires like the general public thinks.

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avatar GasMan

Another thought: The big oil companies make billions, hell, even my state makes 37 cents per gallon on gas taxes, and when you use a credit card, I make a whopping 4 cents. There is no other business that makes such a small return on investment!

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avatar jack tabibian

Yes it’s true that what stations charge for use of credit card for payment wipes out what you get back from the CC companies..BUT who do you think pays for that rebate…YOU GOT IT..THE GAS STATION or ANY OTHER ESTABLISHMENT THAT YOU USE THE CARD AT. I own a gas station and every mont i pay $12,000.00 in CC fees…..SORRY !!!!! P.S. DEAR CONSUMER…PLEASE SPEND WHAT YOU CAN AFFORD AND BEAT THE SYSTEM…YOU’LL FEEL BETTER WHEN YOU HAVE MORE MONEY IN YOUR POCKET INSTEAD OF THE BIG CONGLOMERATES…”JUST SAYING”

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avatar Jim Nichols

I have a few gasoline stations in western NC & today finally had to do the cash/credit scenerio….
I am charging a 6 cent differance….WHY? Simply cannot continue to absorb the fees. On my way back from Charlotte,NC last week I stopped by 12 stations on the way home & 9/12 had cash/credit price ranging from 4-10 cents.
The higher the price for fuel….IF it goes to $4 per gallon… the more the CC charges are because they are based on the amount of the total dollar amount.
It’s a mess all the way around folks…EXCEPT for the MC/Visa/Amex’s of the world who get theirs one way or another.
Oh, and by the way, Just paid $40 for a box of tomatoes…you’ll see food going up big time sooon :(

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avatar Rob S

And Jim, you know what pisses me off? The banks incur the same cost if the consumer swipes a card for $1 or $1,000 dollars.

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avatar Rob S

My point is, there should be a cap on what they can charge dollar wise for a swipe fee.

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avatar Consumer

When I was young (yearzzz ago), working for a bank never made anyone rich. They gave you a fancy title…lots of business cards…and a lousy salary. The only person that made good, not great, money was the bank president. Nowadays…there’s so much money to be made! Why the diff? I think it’s because most people did NOT use credit cards back then. Banks are getting richer and richer aka powerful because of all the money they are making from credit cards. That’s money from regular folk. We, as a nation, really need to work hard to get off credit cards, except in emergent situations. Or we need to create a new model of helping each other out. A sort of credit co-op maybe? Today’s banks are now huge and international…the neighborhood bank is almost extinct. Worse, these huge forces are something to be reckoned with! A bit scary in fact. Look at the mess we’re in now. The credit card addiction transformed itself into a ‘free’ mortgage/house addiction. Folks, we can fix this but it’s going to take work, an out-of-the-bank…er…box model, and a whole bunch of cut-up plastic cards!

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avatar Consumer

Flexo… How old are these comments…? Maybe you can turn on the timestamp here?

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avatar IGetItDude

I am not going to debate the good or evil of credit cards. However, what the gas stations are doing is probably wrong. Unless tha gas stations sign different merchant agreements than other businesses, they AGREED to process credit card transactions without charging surcharges or “convenience fees.” Providing a discount for all payment methods other than credit cards (translation = “cash” since gas stations usually only acccept cash and CCs) amounts to a surcharge on credit card transactions no matter what euphemism you use to sooth your conscience.

If you agreed to such an agreement, and you are now trying to charge your customers extra for using credit cards, then you are in violation of your agreement and you are cheating your customers. You made a decision to accept credit cards because you felt it would be good for business. If you don’t like what the credit card company charges you, or it is no longer good for your business, stop accepting them. What? You’ll lose business that way because people like the convenience of paying with credit cards? I guess the credit card company is providing you with a service for their cut after all.

I get it. Credit cards are yet another cost of doing business, and there are way too many costs of doing business as it is. However, unless you can convince your card company to give you different terms, you really only have to ask yourself one question: Will you be more protifiable overall by accepting credit cards and adjusting all of your prices to account for the added cost of doing business or not? If yes, then accept them, abide by your agreement, and quit price gouging your customers. If not, then don’t accept them at all, but don’t whine to me about losing customers over it.

You figure out your costs of doing business and how much profit you want to make and you price things accordingly. If you can’t match your competitor’s price, you find a reason to convince your customers that your higher price is worth it. That’s capitalism.

Newsflash: I don’t care if your cash price is lower or not when your competitors can offer a better price than you do if I pay with the very same credit card. Stop accepting credit cards totally and explain that you’re doing it to keep the total cost of goods to me lower, and I’ll respect that. Then you’re blatantly giving me a choice as to whether or not I shop at your store for principle or the other guy’s store for convenience.

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avatar Rob S

As with everything, there is always a way around the CC agreement. The cash discount is totally legal even if the cash price is the same as another station and they jack up the credit card price. Why? because the government can’t tell you what you can charge for goods or services, Merchant agreement or not. Not to mention that the CC companies will never complain about this issue, because it will bring to light the amounts of money they are f**king consumers and businesses out of.

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avatar godiva de maus

Effective Jan 27 2013, the law changed to permit merchants to charge transaction fees for credit cards (but not debit cards — they can charge a small transaction fee for transactions $10 or under). In order to be charging this fee on credit cards, they must 1) notify the Credit Card company in writing of their intent to commence charging a transaction fee to customers, 2) they must post signs externally and internally (and there are size requirements on this in terms of minimum sizes and placement) notifying customers of their intent to begin charging transaction fees and these signs have to have been placed up on their establishment for 30 days prior to the charging of any fees. 3) there are restrictions on how much the merchant can charge for transaction fees 4) A merchant can opt to offer a “cash price” but all forms of cash have to be given the “cash price” (so checks and actual cash have to be treated the same). Of course, a merchant can opt not to accept checks, but debit cards must be treated to the cash price (because they are considered cash).

Personally, I don’t patronize establishments that charge me a fee to use a debit card (which is against the merchant agreement they signed and a violation of the law in 10 different states) and I report them when and whenever I find them to the Credit Card Company that issues the debit card.

Also, I won’t shop with merchants who charge transaction fees for credit cards. My choice, free market. Yes, that does end up meaning that smaller places won’t get my business. So sorry, so sad. It’s my choice and if you go out of business because of it, well, I guess your business model wasn’t robust enough to withstand the free market.

Lastly, a LOT of these independent franchise owners are acting like this money is entirely out of their pocket *always* when it probably isn’t (it may be, depending). What I mean by this is it is considered a valid business expense which is eligible for business cost deduction from your taxes. What that means is we the taxpayers are already giving you a break on your taxes for these business costs, so charging me for that expense again is simply adding insult to injury.

I don’t want to get into a flame war, but you business owners should realize that a lot of us consumers are getting wise to all this and we are making choices based upon how you decide to operate. Continue to fleece us.. and well… you probably won’t be in business much longer. Good riddance.

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avatar Karl Stadtmueller

I would like to set some records straight. One time I over heard that a gas station is charged for processing each credit card purchase. So the following is happening. Credit card people are not being charged extra for there gas. What is, the CASH customer is not paying for the processing of the plastic card purchase

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avatar MIMI

That’s exactly the same thing. Six of one, half dozen of the other. Why is it that this one cost of business is only passed on to certain consumers? Do you charge cash customers extra for the price of hiring the guy to work behind the counter? Because if I use a credit card, I don’t need a human inside, so why should I have to pay extra for that guy’s wages?

It’s just an excuse to charge more to certain customers so they can squeeze every single penny possible out of consumers.

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avatar Rob S

People like yourself, that have never owned a business, much less a gas station, have no idea what they are talking about. Let me put it to you so you may understand. A restaurant makes approximately a 200% profit margin on one customer so the swipe fee doesn’t hurt them near as much. Gasoline has such a small profit margin (about 1.5 to 2%) that owners actually lose money on the sale of when a credit card is used. Not to mention all the other bills that have to be paid (employees, maintenance, electricity, etc.).

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avatar Randy

This is incredibly annoying especially when the advertised price is the cash price. And on top of that so many people use credit cards for the rewards that they’re often fooled a few times before finding a station that charges what’s advertised. What’s ironic is that most Exxon and Mobil stations in the area do this and at the same time they promote their ExxonMobil credit card touting the great cash rebates on every gallon purchased. In essence they’re asking me to sign up for their card yet be penalized to use it.

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avatar qixx ♦1,895 (Half-Dollar)

Most stations (all the ones in my area with a store branded credit card) charge the same for using the store brand credit card and for using cash. The big one here is the new shell card that links to your bank (Target has a similar card) that essentially works like an electronic check pulling from your account instead of using credit. Lower fees and at shell they even give a discount using the card over those who pay cash (or credit).

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avatar Rob S

That is because when a customer uses an Exxon or Mobil card, the business is NOT charged a swipe fee. It’s only MC, Visa, AMEX, Discover.

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avatar Keith K501

Had to add my two cents worth here. I hear a lot of gas station owners telling me the CC charges are eating them alive. I have to ask, what were you doing prior to all this?? I’m in Michigan and I noticed that all the gas stations here went over to the two tiered system right after the banking fiasco started to unfold in late 2008 with most stations making the change in early 2009. coincidence?? Think NOT! CC companies are charging about 2% according to some of the posts here I’ve seen. Gas is a little over $3.35 / gallon and the premium being charged for using my CC has just reached 10 cents/gal. Seems like the retailers are padding their profit margins to the tune of 3.3 cents/ gal which is about TRIPLE what they make on the gas alone (according to all the station owners I know). Looks like we’re not getting the FULL story from these individuals after all. Everybody’s dipping into the gravy just because they can and, as usual, the guy and gal on the street gets the shaft!

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avatar Rob S

It’s ironic and moronic that before Lord Obama took office, gas was below $2 per gallon. It has since doubled and so have credit card swipe fees.

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avatar godiva de maus

You’re making an idiotic comment. March 2008 fuel prices were above the $4 mark, after the fiscal crash of August/September, the per barrel price fell to 120 per barrel, dropping gas prices below that $2 threshold. So, the drop in price was directly related to the financial crash, not any “doing great Dubya” policies and hence, the increases in prices afterward haven’t a thing to do with anything Obama has done.

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avatar snoorani11 ♦126 (Cent)

An independent gas station owner (my entire family is in business) and before the law was passed and the economy soured my family’s store averaged $90,000 in the store sales (not gas) with an average of 20% profit margin after the economy soured it was $60,000 and even less profit margin. Before the law passed we justified it as a cost of business and sucked it up even though we made less money due to it. After the economy soured we couldn’t even afford to justify it anymore. Other businesses don’t have this problem as their profit margin is higher than the 2% we have on gas. Real example here my gas delivery cost $3.22 a gallon today. I’m selling at $3.21 a gallon-including the credit card fees I’ve just lost 7-9 cents a gallon. If I don’t sell for $3.21 people would go to the neighborhood Walmart or Kroger or Sam’s Club which doesn’t sell branded fuel without additives (in fact Walmart has an option where you pay like $5 more for the additives) so their cost is way lower than mine. For all the people who complain that we are buying foreign and employing illegals they forget that by buying at fuel at Walmart and Kroger they are condemning local mom and pop stores. Sorry for ranting but tired of people comparing gas stations to banks and car dealerships, most of us aren’t millionaires and just trying to make a living.

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avatar Geronimo

I think some of the people in this thread really don’t know what they’re talking about. In California there are retailers that do not accept credit cards AT ALL because of the fees (ARCO…part of BP, COSTCO). There are other retailers who choose to provide a cash discount ranging from 4 to 10 cents. This allows small independent or branded retailers to compete with Arco and Costco. Why should cash shoppers be penalized for higher credit card fees which are now over 10 cents per gallon. I would pass the savings on to the consumer!!! Think about it!

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avatar Marie

OK, so if your logic is that cash customers shouldn’t be forced to pay for the price of processing plastic, then I, as a credit/debit card using customer shouldn’t be forced to pay for the price of hiring an attendant whom I don’t even speak or interact with. I also shouldn’t have to pay for the price of your physical convenience store since I’m not buying anything inside or even going inside.

Merchant fees are part of the cost of doing business, just like paying rent, taxes, utilities, and salaries are. Unless you are going to separate these costs out and charge people accordingly for whichever they use, it makes no sense to charge more for credit/debit purchases. It’s just a way for you to increase your profit margins and further gouge your customers.

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avatar Sam

I guess you should buy one of these pump and install it in you backyard so no one has to worry about and you wouln’t have to use credit or cash

someone mush have paid lots of money on pumps and other stuff.

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avatar bPoint

Or you could buy my car, and charge whatever you want for the gas to keep it running.

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avatar Rob S

Spoken like a true uneducated Liberal, and I don’t mean a college indoctrinated Liberal when I say uneducated.

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avatar Tyler

Credit Card companies run quite the racket when it comes to what they charge merchants. Typically it works out to something like 50 cents per transaction plus around 2% of the purchase price.

If you were to use your card for small purchases, say just a soda in the store, the merchant probably loses money on the transaction if they want to keep competitive margins on their products. If you make a large purchase, say a patio furniture set… the merchant may end up paying 20 or 30 dollars just for the right to swipe your card, even though the card holder will still be the one paying interest on the loan!

Credit card companies perpetuate this scam on consumers by sharing these fees with the card holders in the form of “cash rewards”. Merchants are forced to pass on the costs in the form of higher prices, and really the only one who gets screwed is the poor guy paying with cash, who will see none of the rewards returned to him.

In California, typically a credit card price and a cash price are separately posted on the signs, and at the pump. Debit card users are informed of the extra costs on the screen when they pay. This seems perfectly fair to me. I think this practice should be spread to all businesses… have a credit card vs cash price for all your transactions. Allow the consumer to decide if they want to take the savings using cash, or pay for the convenience with their card. No more masking it with a one size fits all strategy!

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avatar Bitcoin Money

“The Durbin Amendment is part of the Dodd-Frank Act financial overhaul enacted last year, that caps debit-card swipe fees to help merchants who said they were powerless to negotiate rates with payment networks Visa Inc. (V) and MasterCard Inc. (MA) ”

“The Fed proposed capping debit-interchange fees at a flat 12 cents a transaction in December, compared with the current formula that averages 1.14 percent of the purchase price or about 44 cents.”

As the result, those cash back reward programs, or free airline miles, or whatever for using your debit card are getting phased out.

link

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avatar Rob S

There is also a loophole that allows banks to not abide by the law at all. I’m trying to remember the exact loophole, but it’s similar to this: If a banks total assets are less than 500 billion, then the Durbin act doesn’t apply to them. I haven’t seen one penny in savings on swipe fees since it was implemented. It was all smoke and mirrors in my opinion.

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avatar SAM

i work at gas station for 15 years i have seen plenty of idiots at gas stations from coming to buy 50 cents gas and can soda on dam credit cards this people are stupid if you dont have dam cash dont get out of your fucking house.

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avatar MIMI

You clearly don’t understand how credit cards work.

It’s also obvious why you work at a gas station and aren’t performing brain surgery.

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avatar John Gilmore

I couldn’t agree more with you Mimi!

It’s ironic that Sam is talking about “idiots” but yet he cannot use correct grammar!

Also, he just might be out of a job if less people were to shop with their credit cards and simply remained home.

As others have stated, if the cost of accepting credit cards is too high then these merchants need to reconsider what forms of payment they will accept.

I don’t mind paying more for using my debit or credit card as I am sympathetic at their profit loss when the transaction costs more than the merchant makes due to all the fees imposed.

However, I only ask these gas station owners, or anyone else for that matter, clearly post the cash price and debit/credit card price so that I can make an informed decision!

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avatar Rob S

By his sentence structure, I might agree with you, however, I am a college educated, gas service station owner myself, so I find that analogy reprehensible. May I ask your job description?

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avatar RDog

You’ve worked at a gas station for 15 years and you’re calling someone else an idiot? Look in the mirror you illiterate fool.

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avatar Robert Sixto

Same thing happened to me. I was at a BP in Miami, and was drawn in by the gas price sign. It was night time and every letter was lit up except the wording that said cash price. Obviously this is bad business and I will cancel my credit card with them because of it. We as consumers need to punish poor business practices. Maybe someone will notice and start treating customers as if they value the long term relationship that will net a lifetime of profits instead of a quick con in order to make a fast dollar.

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avatar Richard W.

I fell into the Exxon/Mobil trap this evening at my local station On the Run Knapp Street, Brooklyn NY
The Board price stated $4.099 for regular. I used my Mobil Speed pass and the price went from $4.099 to $4.179. I was furious and was going to cut up my card and speed pass and kiss Mobil/Exxon good bye. However after reading this blog, I deceided to follow the advive of the blogger that said the best way to get even with the blood sucking vultures is to buy one gallon on your credit card and ther rest for cash. Bury them in paper work and cc charges.
Good Luck and Fight back.

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avatar Rob S

Speed Pass is treated like a credit card as far as swipe fees are concerned.

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avatar Vic

To all the people “fighting back” by making a bunch of one dollar transactions – this is ridiculous. I’m not a small business owner, or affiliated with the credit card companies in any way, but it makes no sense to want to pay the same price for something when it costs the merchant different amounts to deliver it. It costs the gas station more to buy brand name peanuts than no-brand peanuts, so the brand name peanuts cost more. Its still the same thing in the bag! So if it costs them more to accept a credit card than it does to accept cash, it should cost you more too. And don’t think gas stations are the only place you are forced to pay for the high fees credit cards are charging either. The food or magazine you get in the store already has the credit card fee factored into its price. EVERYTHING we buy in America costs 2 – 3% more than it should because of credit card fees. Its like a tax but none of it goes to pay for the public good! Having two different prices, and forcing consumers to chose if they are willing to pay more for the convenience of using a credit card, is the only way to bring credit card fees down. America was built on price competition. Credit cards should be no exception.

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avatar Janis

So if I go inside at the same gas station and pay cash for my milk and bread shouldn’t I get a better price?

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avatar GMAC

Vic,
No objection, but the price they advertise should be the credit card price, We shouldn’t have to find out at the pump that we suddenly are paying more because we are using a credit card. That is like a bait and switch in anyone’s book.

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avatar Rob S

Vic, you are a smart man. Actually, you are an average smart man, it’s just that today’s society happens to be stupid (a lot of them, not all). Your comment is full of sense.

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avatar NHDOLL

I don’t know what it is like in NJ for law. But by law in the state of NH they DO not have to have the big sign on the street. Only on the pump where it is clearly marked with duel priced signs. It is coming and not a new “thing” they use to be able to do that years ago. And why in hell should they have to pay for your cash back bonus?

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avatar Rob S

NHDOLL, you are correct. 20 years ago there was always a different price between cash and credit, but the big banks had this grand idea that they wanted stations to sell them for the same price, and promised to sell the gasoline at a lower amount to offset the costs. Well guess what, they got sued and lost, and they had to pay out billions in settlements. There is also a massive lawsuit against Visa and Mastercard right now, because they have a monopoly and there is no competition for businesses to get their swipe fees lowered. The settlement is 60 billion dollars going to every business that took in credit cards since 2004.

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avatar Mike

Now everyone has to walk around with a wad of cash in the pockets. This ought to go over good with the crack addicts.

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avatar Dan

Well I use bank card so I am not lining the credit card companies wallets and yet I still get charged a fee. This should be an illegal practice. I just fill up $1.00 at the gas station I want to screw so they get hit with the transaction fee and then I top off at Hess where it has always been cash/credit same price and they still have FREE air.

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avatar leia

not all Hess stations do that anymore… watch them. I hit one today that their billboard (or whatever you call it) price was $3.69, but the pump said $3.79. When I asked why the difference, I was told $3.69 was the cash price. Why don’t they put SOMEWHERE, on the pump, on the sign, whatever, that it’ll cost you more to use the credit card?

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avatar Rob S

Yeas we know, it’s all about what YOU can get for nothing while the others pay for it.

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avatar CashIsOldSchool

Our wonderful federal government should make cash/credit pricing ILLEGAL plain and simple!

Credit card companies should NOT charge exorbitant fees to merchants, they make PLENTY off finance charges. They are NOT going broke!

And to make it worse the gas stations do this when prices are at near RECORD highs!

Be realistic, the average person is not going to carry $100 or more (in cash) just to fuel their car.

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avatar Shawn garnier

LETS BE REAL…..THEY ARE ALL BEING GREEDY!

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avatar Rob S

And you’re not? By using a credit card and enjoying the free rewards, knowing that the business is paying for your rewards. You just made a fool of yourself.

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avatar Shawn garnier

AND WHAT IF IT IS A DEBIT CARD…..SAME AS CASH!

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avatar Rob S

Debit cards incur almost the same fees. 1.6% plus 10 to 25 cents per swipe. Not much difference at all.

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avatar kofi

The extra cents should be charged on the transaction and not per gallon.

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avatar Nicole

Except that fees are charged per transaction as well as a percentage of the sale.

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avatar fuelgirl

Ok I’ve read so many of the comments that state the credit card price is higher because the charges are being added to the price. That’s is NOT the case. The cash price is a discount or a reward if you will. The company I work for has several different name brand stations. Our credit card price is the comparable price to the other stations in the area, but our cash price is usually the cheapest price around. Another thing that is not mentioned in the above comments if a stolen credit card is used directly at the pump the station has to pay out of pocket for those charges. With new credit card laws all of our computer systems had to be upgraded costing each of our stations around $15,000. Who do you think paid? Visa helped push the law through but didn’t put up any money to help with the conversion. Do research and get all your facts before talking out your rear end. Just because you are attached to a piece of plastic doesn’t mean that companies should pay for your attachment.

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avatar Rob S

I forgot about that expense FuelGirl. The credit card companies had major fraud problems and the businesses had to pay for their protection. It cost me $30,000 because I have two POS’s. Good point. Why am I responsible for their fraud problems?

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avatar Johny Jatt

THIS ISN’T FAIR WITH THE GAS STATION OWNERS WHO DON’T HAVE CONTROL OVER THEIR GAS PRICES, ITS ALL ABOUT THE COMPANY THAT HAS THE CONTROL OVER THE GAS, SOME STORE OWNERS LIKE US DONT MAKE PROFIT OVER THESE CREDIT OR CASH, WE HAVE TO DEPOSIT ALL THE CASH THE NEXT DAY TO THE COMPANY’S ACCOUT OR THEY FINE US LIKE 500 BUCKS. PEOPLE COME INTO MY GAS STATION AND TELL US ITS ILLEGAL AND TELL THEY ARE NEVER COMMING BACK, WE JUS SAY (OK), AND WHAT ELSE COULD WE DO, BUT THE CHESTNUT MART COMPANY FORCED THIS CREDIT PRICES TO BE 8 CENTS HIGHER AND PEOPLE FIGHT WITH US. IM AGAINST THIS CREDIT PRICE BUT THE COMPANY DOESN’T CARE ABOUT WHAT THE PEOPLE SAY.

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avatar GMAC

I hear a lot of station owners making excuses here. You should post your credit price out front as the advertised price, If the customer pays in cash, he will be pleasantly surprised by the supposed cash discount. The customer paying by credit card will also not feel ripped off by paying 10 cents/gallon more than the ad price. If a station doesn’t clearly post their price, I am all for pumping $1 gas and moving on.

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avatar jrgal331

Okay… Visa, Mastercard, and Discover all say that the cash discount can not be more than the fee the merchant pays. The credit card fee is a few cents plus 1 to 2.5% of the total transactions. At $3.90 a gallon the cash discount should not be more than $.04 to $.05 per gallon. Any higher than that and you gas station owners are actually losing money. Learn to read your credit card stateemnts and learn to negotiate your credit card processing costs. You say the banks are taking all your profits, but the large cash discounts hurt you even more.

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avatar Rob S

You are either clueless or misinformed. I have talked to 40 – 50 processing companies and I pay the lowest rate of all of them. The minimum Visa, MC, or discover transaction fee is: 2% plus 10 cents. That’s 2% of the entire sale plus 10 cents. That is on the lowest end. It can be as much as 4% plus 25 cents per transaction.

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avatar Paul Vachon

The Valero I use even has a sticker on the gas pump that says “Please use credit card.” Nowhere does it say there is a fee. I don’t see how this would be legal.

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avatar Rob S

Keep supporting Venezuela and Hugo Chaves.

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avatar snoorani11 ♦126 (Cent)

by BP and support death and environmental pollution, a Valero station owner and I have nothing to do with where Valero gets its crude from-all you are doing is condemning the local American owner.

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avatar leia

I agree with the ones saying that they should be able to charge more for credit cards, but that’s not a consumer’s point. It’s the practise of advertising the ‘discount’ rate and zinging you at the pump if you pay by credit card. It needs to be posted SOMEWHERE that you charge x cents per gallon for credit card use, and it never is! I drove away from a station tonight that posted a deceptively lower price than anyone else because their ‘discount’ was 10 cents! I have other stations I use quite frequently that charge the same as cash as for credit cards, or if they don’t, they post it! Why is it so darned hard to POST that you charge extra for credit card use? Most of the ones that do have a very visible sign that says ‘we give x cents discount for cash! Why can’t others do so as well?

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avatar David Malave

I attempted to fill up at the pump at a LukOil on route 3 west in west Paterson… It was 4.15 pg for premium paying cash…. and 4.50 pg using my card!!! 35 cents difference?? I stopped the pump at 20 and I went on my way…totally absurd!!! Hopefully they pass a law!

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avatar Brad Chaffee

It’s kind of hilarious to see so many people getting mad at the gas stations. If the government forces stations to charge a tax on each gallon of gasoline, then the store charges a little more so they can make pennies. If a credit cad company charges merchants every time you swipe your card, why should the merchant have to eat the additional cost? We are the ones buying the gas and using the service.

Comical to see so many wanting the government to “step in” because they have such a good track record at “helping”. They are the cause for most of the problems we face from day to day yet we (you not me) ask them to step in to save the day. Anyone paying attention can see the folly in this. They can’t spend less than they make, balance a budget, yet there are people out there that think they are competent enough to fix the problem. Get a clue; they ARE the problem.

My solution: Fill an envelope up with cash when I get paid and mark it as fuel money. When I need fuel I’ll use my envelope and pay the cash price. Problem solved and I didn’t even need the government to help me figure it out.

What a bunch of spoiled-rotten consumers we have become. “Oh my, my life just became less convenient…where’s the trustworthy government?” Pathetic!

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avatar Ike

If a gas station posts both the cash and credit prices on a large sign for all to see, but the credit prices are clearly above the rate its nearby competitors charge and the cash prices are identical to nearby competitors’ cash or charge rates, it would seem that a strong case could be made by the credit card companies and the states that have laws prohibiting surcharges, that the higher credit prices DO include impermissible surcharges. California (and many other states) does have such a law (see below from Visa’s website).

I have seen an independent station in CA that follows this practice. Its two closest competitors (two other independent stations on different corners of the same intersection) post only one set of prices for those using either form of payment. These competitors prices are, however, identical to the cash prices at the first station, and about 6 cents lower than the first station’s credit prices. If the intent of Visa’s rules and state laws are to protect credit card users from paying extra to use their cards, the spirit of the rules/laws are being violated. Enforcement is needed if the credit card companies and the states are serious about the surcharge prohibition. Otherwise, the rules and laws should be abandoned and the pretense ended!

From Visa:
CALIFORNIA POSSESSES A “NO SURCHARGE RULE” FOR CONSUMER PURCHASES
“No retailer…may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means…”
Statute: Cal. Civ. Code § 1748.1(a) (West)
Discounts for Cash Payments are allowed in California
“A retailer may, however, offer discounts for the purpose of inducing payment by cash, check or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.”

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avatar Steven

These are the facts: Every time you pay with a card, the bank earns a fee. That fee comes from someone. The merchant pays it, and, if he’s smart, he passes it on in the form of higher prices. That means those who pay with cash subsidize your dirty little credit habit that makes the banksters rich.

Those of us who don’t want to give our hard earned money to the banksters deserve a discount. Those of you who are either not smart enough to understand or too lazy to care deserve to pay more. Sorry, but why should I pay for your habit?

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avatar Nancy Marcotte

How is charging extra for a credit card purchase legal. I know it digs into profits, but it is the cost of doing business. I own a small cafe, I can’t raise my prices for credit or debit card purchases. In fact I don’t know any other business that can. How do gas stations get away with it?
U

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avatar qixx ♦1,895 (Half-Dollar)

I believe some of the new legislation out of Washington this year made it legal for all businesses.

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avatar peter gold

Nancy because your café make 300% on your coffee, gas stations have a very little profit margin

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avatar tiffed in CA

We have a gas station out in our area of So Cal that charges 12 cents a gallon more if you pay with debit or credit card. I thought the law was they could charge no more than 5 cents more for credit, but this station really reams you… (Shell, corner of Warren Road and Florida Ave Hemet)

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avatar Ike

In response to the store owner, I don’t see how a gas station owner could possibly stay in business when he is supposedly paying more to the credit card company than he makes in gas sales, given that most of his sales are probably from gasoline and that most people pay with credit cards because they either don’t carry enough cash or just don’t want to bother going inside the shop to pay, when its so much easier/faster to pay at the pump with a card. It’s hard to believe that a typical gas station owner makes enough profit selling snacks and other items to stay in business. Yet, the individually-owned stations continue to exist. I’m not sure we’re getting honest numbers.

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avatar snoorani11 ♦126 (Cent)

I’d like to ask you a question, do you buy gum, drinks, etc. separately or with your fuel? Gas station owners, me included, bank on the fact that if people pull in for gas they will come inside the store and purchase a pack of gum (which has higher profit margin). We usually eat the loss on fuel products as a cost of business but with higher fuel prices which equals higher CC fees we cannot afford to do the same. Don’t believe me but its the not the gas station owners that made record profits-that was Visa and Mastercard.

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avatar Dina

Does anyone know why I am being charged $1 somewhat frequently by Exxon Mobil gas stations. I have not even bought this gas and I was charged two days in a row. I live in NJ.

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avatar vkicki

my experience has been that service stations often “try” your card when you get gas to see if its good………..usually the dollar comes off and the real price goes on i bet while you see them on your account they dont stay on there long……..its just a way to verify that you have a valid………open card…….if you are SURE you have not bought this gas (ie read the small print at the pump) i would call my bank…….its possible that someone got a hold of your credit card info and may try to use it!! hope that helps Vicki

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avatar Cindy

I hear what you are saying, but cant they just as easily do that with the full charge amount?
If it turns out to be a bad card, its not like they get the extra $1 for their troubles.
And that $1 charge does not come off right away, sometimes 10 to 14 days. I know $1 does not sound like a lot, but multiplied by all of us who buy gas this way? They are sitting on a lot of money. And how are they deciding who to pull this $1 from? They seem to pick my husbands card over mine, it doesn’t happen to me. I cant figure out who is doing it, the gas station, the credit card, or the bank. None of them are owning up to it.

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avatar Stormy Dragon

I hear what you are saying, but cant they just as easily do that with the full charge amount?

Yes, but by then you already have the gas, so if it’s a bad card, it’s very easy for you to make a quick get away.

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avatar Howie Frank

I own a gas station . I have customers coming in once a week asking me this same question. IIt’s the bank that is holding your $1.00. By law gas stations are not allowed to hold your $1.00

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avatar Gas Man

Consumers are clueless when it comes to the gas station business. Let me break it down for everyone so they will be able to understand what goes on.
The average yearly margin on a gallon of gas for a station owner is 10 cents. If a customer uses a credit card, the fee for the owner of the station averages 2 1/2 % of the sale price per gallon.
Example : I sell a gallon of gas for $3.65 per gallon. My profit margin is 10 cents on that gallon before expenses. The credit card company (transaction fee) they charge me on that gallon is 9 cents. That leaves me a measly 1 cent profit before paying my bills to sell that gallon of gas (employee/cashier, electricity to pump the gas, repairs and maintenance). Gas station owners actually lose money on gas, especially now that prices are so high.
We are being forced to go to a cash discount or charge more for credit because we are being put out of business with all these fees. The government makes 35 cents on a gallon of gas and we make 1 penny? Get the picture. If we raise prices to be able to cover the credit card fees, we are labeled PRICE gougers. When you go to a restaurant, their profit margins are 300 % or more per plate, so their profit margin is so high that credit card fees do not affect them as badly. The credit card companies are making billions in credit card fees while leaving me 1 penny per gallon and I am the one left with all of the costs.
Cash discount at this point is our only option.

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avatar Cindy

Thanks for the lesson in gas station economics. I had no idea. I wonder if you could tell us if you are one of the larger chain stations or not? And also if you are a chain, if one uses the chains credit card, does it still cost you if at all, or less than the other major credit cards, ie; visa and master-card.

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avatar Gas Man#2

I also own a gas station. Gas Man is 100% correct. If a customer comes in and spends $60 on an American Express Card, the transcation costs us $2.10(3.5%). We make $1.50 on the 15 gallon purchase. This is why we have to charge more for credit. If you like a station ask for the gas companies credit card(I.E. Mobil, Gulf,Sunoco). The station owner does not get charge a fee for these cards and therefore should offer you the “CASH” price for their credit card.

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avatar Consumer

If you do not want “clueless” consumers complaining about what they are paying, then you should advertise the ACTUAL price the consumers will be paying; not a reduced price designed to lure unsuspecting consumers to your station. The issue is not whether gas station owners are profiting from this hidden charge. The issue is that the gas price advertised is misleading and is deceptive and, it is.

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avatar Jimmy snow

sorry pal, but BS. you’re exaggerating with that 1 penny per gallon crap. My neighbor owns 3 gas stations, and in the past year alone, has come home with 3 different luxury brand vehicles for he and his family (all new – not 20 year old lexuses lol) – the gas stations are all he has – he’s not running some ultra successful side business.

I’ve also dated a girl who’s family had a gas station. They too lived very comfortably, and without want for anything, with just 1 station.

I’m not grudging them their good fortune, but please don’t cry poverty when it’s really just sour grapes at the fact that you’re not able to do as you please with tighter regulations in place.

Gas stations *losing* money at the pump – that’s hilarious.

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avatar snoorani11 ♦126 (Cent)

If you are basing your opinion on TWO store owners you know then you my friend are full of B.S. not Gas Man. But tell you what I’ll explain it to you. My gas cost me $3.22 I am selling it at $3.21 losing 7-9 cents with the CC fee. Why do I sell it for a loss you ask? Well if I don’t price it competitively the consumers (you) go to Sam’s Club and Walmart and buy the additional items from there such as sodas, gum, etc. on which I do make good money. The people you mentioned probably have higher in-store sales than fuel sales causing them to make good money. There are 20,000 gas stations nationwide-most of them don’t have such good fortune.

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avatar Tom

How about you Gasmen take this up with the credit card companies instead of screwing us consumers? Who the heck carries around wads of cash these days to pay for gas? We want to give you our money for gas, but you leave a bad taste in our mouths by engaging in this shifty business.

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avatar Eric

Yeah… So here’s what I do… I gas up my company van… I’m paid by the hour, btw… so i pay with CC and buy a gallon of gas. Then I hangup the pump and buy another gallon. I do this until full. Sometimes it’s a half hour, but whatever, I’m on the clock. I’m costing you a fortune. If you don’t like it, stop passing CC fees on to the consumer (it’s a cost of doing business after all,… *your* cost), or stop taking CC’s at all (and lose those customers). But don’t bitch. If you go out of business… good. I don’t care. i move on to the next station doing this scheme. Eventually, all the shady stations will close and only the honest ones will remain. Sucks to be you!

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avatar snoorani11 ♦126 (Cent)

The fact that you waste your own time (even though its compensated) shows whats truly wrong with America, hint its not the gas station owners. Its vindictive bitches like you-and I would have not cussed but you didn’t want me to “bitch”. And since you don’t mind the fact that you are putting honest businessmen who want to simply earn a living I truly hope that your employer finds out about your “vindication”.

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avatar Luke Landes ♦127,490 (Platinum)

Keep it civil, no name-calling. We’re adults here.

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avatar Ike

I just noticed that a new Safeway grocery store in our area has included a gas station at its site with very competitive prices. The station is adjacent to the street, just as with most other gas stations, with easy access. I suppose it’s possible that this gas station is a loss leader to bring customers to the grocery store, but it offers no more convenience than other stations. In fact, if you need something at the grocery store, you would still have to leave the station and park your car near the entrance to the store. So, my question is: why would a large grocery store chain spend the money to build a gas station, given the high cost of doing so, if the facility would not make enough money to justify the expenses of building and operating the station and buying the gasoline from an oil company? I can’t imagine that any volume discounts they might receive from any oil company would justify the cost, either, especially given the very competitive prices that the grocery store charges for its gasoline (and they accept credit cards without charging more). A major corporation doesn’t invest in a business that won’t result in a substantial profit for the company and its shareholders. The numbers we have been given by the station owners on this board can’t be accurate.

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avatar Gasman3

Ike, Safeway is not profiting from the gas station they have opened. The gas station only serves as a loss leader to bring in consumers to buy Safeway groceries, because that is how they profit. Their statistics show that most consumers that purchase gas will also purchase food items at the same time which with much higher profit. However, in order to get the fuel at a discount price, you still need to purchase food items at the Safeway store to qualify, thus this is how Safeway gets its profit. In addition, the gas that is sold at the Safeway’s gas station is not branded and a discounted fuel product, making their gas much lower quality than high quality branded products. Remember the quote that there is “no free lunch” and that “you get what you are paying for”.

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avatar qixx ♦1,895 (Half-Dollar)

Another reason is branding. Since you spend more time at Safeway (even if just at the gas station) you will be more likely to think about Safeway when you need something. Most gas stations make more (or at least better) profits from the stuff inside the convenience store. Just think of the Safeway as an overgrown “convenience” store.

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avatar Brad

Retail is a very difficult business these days. But that being said, it still offers a very good opportunity to make money if you are really good about finding the way to expand your customer base and attain enough sales volume. Think of it like winning at blackjack in Vegas; you have to “buy in” with enough money to be able to play long enough to make it through the highs & lows you will encounter along the way. Buy in with too little, and you are out very quickly; play the game wrongly (don’t double down when the cards are in your favor), and you miss out on potential gains to be made. And then of course there is a “luck factor” but not really too much more than playing the game correctly.

Business takes RISKS, but offers rewards. Therefore the volume you need may not be very good if you are limited to only one retail location. The best small retailers have at the very least 3 or 4 locations to help them spread their costs and associated risks over several stores. Managing 3 stores isn’t much more difficult than managing one store. I personally do not see why anyone would get into a small retail business unless they had a strong desire, or a goal, to expand to several locations. WIth only one location it is just too difficult to make a profit; or the profit is so slim that you would be better off working for someone else. With one location, sometimes the best profit is made by speculating on how quickly you can bulld that business up and then sell it to another investor interested in that specific location. “Location, location, location” applies to retail the same as with any other real estate investment, just like with your home. Attempting to “slug it out” and build up a small business like a gas station is a LONG haul, and the frustrations are evident from the posts people are making here.

If baseball were easy, everyone could play like Mickey Mantle my father always used to say. Retail is hard; you better be prepared to “play it” like a pro.

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avatar Sirquin

I would like to know why I am being charged the extra credit card charge for gas when I use a cash card bought from the same gas station? We buy these from a Texico station and when used they say they have to treat them as a credit card.
Confused in Taft California

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avatar Owen Chenault

Most of the gas stations here do this bullshit by charging customers 5 to 15 cents a gallon more for gasoline if they use a credit or debit card versus paying with cash. Buy your gas at Speedway,Meijers,Kroger or any gas station that does not pull that bullshit ripping off customers

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avatar Gasman3

Owen,
The station does not charge you 5 to 15 cents a gallon more. The credit card company charges the station you go to every time you use the credit card at the station. Then, the station must pass on to you. In order to keep the price low, you may help the station lower their cost of business by paying cash :). Instead, it’s better to not help out the credit card company from ripping off the station or you. The station you are mentioning of are offering you a discount, low quality fuel with some requirements on purchasing other items like groceries. You are paying the credit card fee of 5 to 10 cents a gallon not on the fuel but on the groceries you buy.

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avatar Jimmy snow

BS gasmen! even with the lies being spewed here – it would at most justify an extra few cents per gallon, NOT 10-15. Show us your bookms, gentlemen – we both know you’re not getting charged 10-15 cents extra in cred card fees for every gallon you pump. If i charged my customers a different price for credit c ard purchases, i’d be laughed out of the industry… and yes, i operate in a very tight margins retail environment too – so stuff it. You’re all making up the story as you go along to garner support for the poor gas station owners who are coming out of pocket to support the greedy banks… LOL.

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avatar Bobby T

The credit card processing fee is anywhere from 2.25% – 3.75%, Our station near Washington DC has many international credit card charges that cost more. The problem is that gasoline profit margin should be based on a percentage margin rather than a cents per gallon margin. If gasoline sells at $2.00/gallon the processing fee is around 6 cents but at $4.00/gallon the fee is 12 cents. Offering a 5-8 cent cash discount saves the station operator and the consumer money. This being said stations should clearly display the cash/credit prices.

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avatar godiva de maus

charging a surcharge on a credit card purchase was, until January 27, 2013 illegal in 10 different states. It was, until that same date, against the merchant’s agreement for VISA and MC. After that date, merchants can charge a surcharge, BUT, they have to notify the credit card company 30 days in advance, they must post a sign exterior to the store, interior to the store, with specific minimum size of sign requirements. At a gas station this notice must also be posted out at the pump AND notice must be posted 30 days in advance of any surcharge being charged.

Remember, transaction fees are valid business expenses reportable as business deductions on business income tax returns. So, in essence, when you charge the customer for the transaction fee, you are, in essence, double-dipping, charging the taxpayers and your customers for the same one-time fee.

I made this argument to a local merchant multiple times over the past year. I was delighted to see that they have now seen the error of their ways and no longer charge a surcharge for credit or debit cards. I think they found that they actually lost more business when consumers became “informed.”

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avatar godivademaus

What I want to know is if those same companies are reporting the transaction (merchant fees they are charged) on their income tax returns as legitimate business expenses. If this is the case AND they are charging the customer for the fees, then it really isn’t a legitimate business expense and it essentially is cheating on your tax (reporting business expenses that you did not incur).

When a merchant charges me .45 for using my debit card (which is capped by law at .24) they are making an additional .21 per transaction. If they report the .24 per transaction as a business expense that takes away from profits, they are now ahead .45 per transaction. For a large corporation, this could work into real money.

I’d be interested to see what the IRS has to say about this.

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avatar J Campo

First of all valero is owned by Hugo Valdez. Second, if any station wants to charge more for credit cards, they’ve lost my business.

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avatar Art Kurtz

The merchant’s credit card fees are not MY problem. They need to negotiate these. What is most annoyong is the station that charge fees on their own house cards and even their own gift cards, as BP on Mill Avenue in Brooklyn does.
Here in New York, I exclusively use Hess Gasoline as Hess dictates its stations charge the same – cash or credit.
I like to charge everything- it’s convenient and organizes my spending. I simply do not pay fees to do this. So, I’m choosing Hess. I’d rather push my car to a Hess station than pay a surcharge.

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avatar Anthony

I love this article, because it pin points exactly the problem facing consumers these days. I firmly believe that owners of gas stations are criminals for making different cash/credit pricing. Here’s why.
1.) On average CC charges are at least more then the % that they get his for transaction fees by the credit card.
2.) This was never an issue in the past, so why make a big deal now. Simple “Most people don’t carry cash”, So we’ll make more profit on the CC individuals.
3.) Most important: Cost of Doing business. The ability to use credit cards is a courtousy to the customers, it allows ease of use. But imaging if everyone takes this stance as a business. “Hmm. How can we accept credit cards and not have to pay out to use the cc a %” ” lets charge it to the consumer” So one day we’ll walk into restaurants and your local pharmacy, etc. Your total is 30 sir, but if your paying by CC, its 35.00. Thank you for your patronage. \

The fact of the matter, As long as we need gas and cannot produce gas on own own, we don’t have ability to control what prices they post. The only thing we can do is explain to the CC companies that this should be illegal and that they are passing your charges to the customer and they should blacklist that station from accepting cards. you get them to do that, and guaranteed, this will stop….Because a gas station that does not accept CC will die quickly. Anyone want to start a petition against his, i’m all for is.

PS: i certainly avoid all stations that do this cash/credit prices.

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avatar Howie Frank

This is what

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avatar Howie Frank

This is what you are missing. A customer comes in to my station and buys $80 worth of gas on their American Express card. Thats 20 gallons. After paying the taxes we make approximately $.10 a gallon($2.00) The fee for AMEX is 3.5%. It costs me $2.80 in processing fees for that customer to bu that gas. I just lost $.80 on that transaction. That’s no way to run a business actually losing money on a transaction.

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avatar Howie Frank

The reason you don’t see that in Restaurants or Pharmacies is that the profit margin is much higher in these types of establishments.

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avatar godiva de maus

You’re forgetting that we know that the fees that you pay to accept that card are deductible business expenses which come directly off your reported “income” (the Schedule C, if you’re filing an individual tax return). So, it’s a 100% offset to your income on your taxes, enabling you to shelter your income.

So, not only do you charge the consumer that fees involved in accepting that credit card purchase, but you get to deduct that cost on your taxes, so you’re actually double-dipping.

So, I don’t know, maybe you don’t claim that deduction on your taxes, but technically, the way things are written you conceivably could and that means you get to charge us and get the deduction. Effective Jan 27, businesses are now able to charge increased transaction fees for accepting a credit card.

What you missed earlier in the thread, that while there are some comments regarding charging the fees for credit card purchases, the ire comes with regard to the charging of transaction fees on debit cards; which is illegal in 10 states (but businesses still do it) and it’s a violation of the merchant contract for both Visa and Mastercard. Back in 2009 when the merchants got a bill reducing the transaction fees for credit cards and debit cards (for themselves) the debit card transaction fee for merchants was capped at .24, yet many of the gas stations were charging .35 and .45 for debit card transactions; again, illegal in 10 states and a violation of the merchant contract with Visa and MC. So, right off the bat, the merchant was making .11 on the transaction and “still” gets to deduct the cost of the original .24, so they are “making” .35 extra. Multiply that many times and that’s a nice little chunk of change and, we understand, maybe it’s hard to give that extra money coming in up… but don’t try to convince us that you’re losing money on the transaction.

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avatar Jason Herbert

It’s hilarious to me when consumers don’t believe they are “paying” for the additional fees that the merchant must pays when purchases are made by credit card. Somehow the merchant becomes “a crook” when he shows you that cost. LOL.

If the business is “paying” for something in the process of providing you with a product or service, YOU (the customer) are “paying” for it whether it’s broken out as a line item or not.

I remember a an A/V company that used to install custom sound systems in night clubs. The pricing to the customer was for a fully installed system. All the components where listed, but there was only one, bottom line price.

The customers would ask, “Well, how much is this speaker and how much is this wire. How much is installation?”

And the rep would say “Well, we get different discounts on different pieces of equipment based on our relationships with manufacturers. We aren’t really at liberty to reveal our exact costs, but we’re confident our pricing is competitive. Please feel free to price check our system versus other installers.”

Then the client would say “No, really. How much are you charging me for this particular speaker?”

The rep replied “Well, if you’d like me to say it’s $1 I can say it’s $1. In fact, if the total price of the installed system is $10,000 I can break it up any way you like. I can sell you all the equipment for $9999 and charge $1 for installation, or I can charge you $1 for all the equipment and charge $9999 for installation. Either way, the entire cost of your installed system is going to be $10,000 and we only sell complete, installed systems.”

ROFL.

Whether the merchant “shows” you how much you’re paying for the ability to pay by credit card or not, you’re still PAYING to cover the merchant’s expense to offer this option.

I find it bewildering that the merchant suddenly becomes “a crook” when they make this particular cost more transparent to the customer.

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avatar Howie Frank

And by the way Art Kurtz Hess is selling all its Northeast locations. I guess that same price
cash/credit just wasn’t profitable.

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avatar godiva de maus

Since effective Jan 27 2013 the “same price cash or credit” no longer applies, that’s rather a false assumption.

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avatar Howie Frank

You’re forgetting that we know that the fees that you pay to accept that card are deductible business expenses which come directly off your reported “income” (the Schedule C, if you’re filing an individual tax return). So, it’s a 100% offset to your income on your taxes, enabling you to shelter your income.

I have owned a gas station for over 5 years and my accountant does work for 80 stations.
The credit card fees do not come back to us 100%. I do not know where you get your information from.

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avatar godiva de maus

Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs.

found in: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses

See also a link from professional bookkeeping blog:http://www.merchantcircle.com/answers/q/66931/Can-I-deduct-credit-card-processing-fees-my-business-incurs-throughout-the-year-on-my-return that also cites the IRS rules regarding business expenses and specifically address the credit card fees.

And see section 5 of the following professional business attorney’s itemization of appropriate business expenses, also specifically itemized http://www.rowesanders.com/top-five-small-business-tax-mistakes/

I would say that if you or your accountant haven’t grasped this one by now… then I sort of wonder if there’s a reason why.

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avatar godiva de maus
avatar Howie Frank

While I agree there are deductions off taxes owed, i never ever get back the $144,000 a year that it cost me in Credit Card Fees.

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avatar godiva de maus

These deductions are 100% deductible, not subject to an off-set or as a percentage. Business deductions directly impact the reported income, as opposed to coming off the taxes owed on the back side of the return, so, that means that the only way you would not receive the full 144,000 per year in credit card fees is if you did not make that amount in gross profit. If that’s true and you’ve been in business for 5 years now, I wonder at your being able to remain in business at all, since you do not seem to be able to earn sufficient amounts to make any profit.

I rather question your whole 144,000 per year in credit card interchange and transaction fees, because even if your fees were double the national norm, let’s say 8%, would mean you would be bringing in, in terms of gross receipts 1.8 million dollars, from which you are able to deduct normal business expenses, cost of products, employee wages, insurance, etc. Now, if your deductions /exceed/ the total gross receipts, then you would not receive the benefit of all the allowable deductions because the cap is your total receipts. Given the fact that you own and operate a gas station, I’m guessing you’ve got some expenses that far exceed in terms of percentage of your gross receipts the interchange and card transaction fees. Given you sell something highly flammable, I’m guessing insurance is one of those huge factors, state regulation is another one, overhead, employee wages… each one of these things takes a bite out of the apple… So, is the reason for your not being able to take the full deduction for the interchange fees really that they are not fully deductible? or is the reason truly that you are not making enough money to stay in business? And is it an intellectually /honest/ assertion to make that the reason for that shortfall of gross receipts to overhead primarily resides with the interchange and transaction fees? And even if it were, originally, you questioned whether the fees were deductible at all, citing your five years as a station owner and having an accountant to provides services to over 80 stations. When I provided you with the data from IRS, you then stated well, they may be deductible, but I don’t get to deduct all of them… But my point was that you pass on those costs to the customer… and then you proceed to take the deduction for the costs you just passed on. Even if you only received 50%, you’re then making a pure profit on 50% of the transaction fee you’re imposing on the customer, to wit: .35 fee to the customer, which ultimate provides you with a .17 deduction, making .17 of that fee “income” and only .18 a fee that you have to cover and for which you don’t get to deduct. Still, the taxpayers (who are also your customers) are paying the original .35 fee on their transaction, plus they are covering .17 on every transaction you make (in terms of your deductible amounts). I fought for you to have more reasonable interchange fees because I agreed with the merchants, you were being gouged by the banks. But after those caps were put in place to assist the buiness owners… I see more of these transaction fees passed on to the consumer, not less.

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avatar Anthony

Godiva: Couldn’t have put it better myself and the research you have done is impressive.

Howie Frank: Its unjust and poor business ethics. It was never done in the past and its another way to hurt the economy. I truly hope one day, your eyes will be lifted. Perhaps it will only occur you get hit with the same situation when walking into someone else business and charges you for using your CC. Remember, its not how you interpret things but how the customer feels, without the consumer there is no business. No matter where you go, if you feel as if your getting nickle and dimed, would you want to go back? I think not. Stop and shop is running promos on money back on Shell. Shell is Priced 20 to 30 cents more a gallon. So why even run a promo if the cost of going to Hess right down the street costs less then the price with the promo. Its all nonsense and consumers are not stupid. We have to fight back.

I’d hate to say it as i’m all for free market, but in this situation, I’d rather have the Govt control Gas prices and no matter where I go, its the same price. In my eyes this has gotten ridiculous and I’d rather have government mandate prices then to have the every day Gas station owner nickle and dime the consumer.

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avatar godiva de maus

Anthony and Howie… just a post script to my earlier comments. I already drive 10 miles out of my way to avoid doing business with a merchant who charges a .35 transaction fee on debit cards (which is a violation of their merchant agreement). Despite being taken to task by VISA for their violation, they continue to impose the fee, couching it as a “discount” (but, when you get to the checkout, the “discount” is added on if you use the debit card and not “deducted” if you pay cash — so it’s not a discount, it’s a transaction fee). So, despite having this being brought to their attention, more than a few times, they insist on gouging the customer, figuring that since I live in a rural area, people would rather pay the fee, than drive the extra distance. Wrong. I will simply make less trips, plan more and go OUT OF MY WAY to not do business with them and I encourage anyone I speak to about it to do the same.

I have nothing against the employees of the establishment, but sooner or later, they’ll get the point or they’ll go out of business trying to make theirs.

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avatar Luke Landes ♦127,490 (Platinum)

Keep the discussion civil and informative. No calling names. I’ll be watching this thread and preventing abusive comments from being published.

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avatar Howie Frank

People have been telling me we are going to drive( no pun intended) our customers away because of the cash/credit pricing for 7 years now. We do charge more for credit($.14) which covers the credit card fees and this enable us to offer our ‘Cash customers a lower(discounted) price. The cash/credit pricing has actually increased our business because we can now offer our intelligent customers who pay cash a cash discount for the gas. These people are smart enough to have cash available to buy the gas. Most of our credit customers just don’t care because they don’t have to take the money out of their pocket, just swipe the card. People think that it is so wonderful to get points, cash back, etc. for using their credits cards, but they don’t realize that the merchants are the ones that foot that bill. We pay the fees. Well smarten up America there is nothing free in this world. Somewhere down the road, you will pay for those points!!!! At least at my station you will……….

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avatar Matthew

I hear all your justifications for why gas stations charge more for credit, but they are not really in a different position than other retailers that accept credit cards. Credit card fees are a cost of doing business, that all other retailers absorb. Gas stations are not the only low margin business out there. If we, as consumers, stood up and declared that we refuse to pay more for credit and start giving our business to stations that charge the same for credit and cash, things would change. The current situation exists because we allow it to and don’t use our power as consumers to effect a change!!

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avatar Howie Frank

I am not aware of any other business where the profit margin is 3%!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Right now the avg. cost for gas is $3.50 the avg. cost is $3.40 after sales taxes

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avatar Civic Consumer

For everyone who is whining about the legality of charging more, it’s a free economy (currently). The fuel station has the freedom to charge whatever they wish – just like I have the freedom to not buy that business’s product. I am well aware that fuel stations do not make profit on the sale of fuel (if anything, they lose $$). The fuel is a sort of advertisement to get customers to buy sodas and snacks inside.

When we factor in rewards from credit cards, the mark up ends up being only a couple of cents for each gallon. Even if I had to put 50 gallons in my vehicle to fill it up, that’d only be a dollar or so. At that point, the consumer must ask whether the $0.25 is worth the convenience of not having to walk to the cashier to fill their 20 gallon tank.

Fuel quality is another big factor here. Top Tier is a certification standard that qualifies good fuel. Bad gas leads to bad engines. Bad engines get bad fuel economy. Bad fuel economy means more gallons pumped at the fuel station.

The lack of education is shocking to me when it comes to issues like this. For example, I was at my favorite QT a few days ago and noticed a woman fueling her new Acura MDX with regular (87 octane) fuel. After confirming my suspicions later (Google search), I noted that vehicle REQUIRES premium (91+ octane) fuel. If you put in low octane, the fuel will explode too soon in the combustion cycle leading to a pinging sound. That pinging sound is the pistons being torn apart. Literally. Give that car a few thousand miles and it will need a new engine. Which is more expensive, premium fuel (for your $45k SUV) or a new engine? It’s this kind of ignorance that needs stamping out, not undesirable corporate decisions.

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avatar Alex

I’ve read through all of the comments and I find it troubling that an important fact is being withheld ( on purpose or not, I do not know ). I do own a business, so I’m all familiar with cc processing fees but I also know that without cc, I would not have the critical amount of business to sustain operations. This is fact that nobody is mentioning.
So you have to pay the cc processing fees and it’s eating into your profit PER TRANSACTION.
But now many more of those transactions do you have because of the convenience of being able to use cc?
So, let’s look at this scenario, you make 6% profit when getting cash per transaction but only make 1.5% or 2% when the transaction is made with a cc. But your total inflow for the day is maybe 30% cash and 70% cc. Now let’s count which one gives you more profit at the end of the day. Gas business is volume business, so don’t pretend that it’s not.
The price should be same for cash or credit and if you want to give discount for cash customers, it’s up to you but advertise regular for your business ( based on percentage of sales ) price for everyone to see and then you can show the discounted price at the pump.
Every self respecting business knows how to price their product to account for all business expenses, so let’s not cry about high fees but set a realistic price and let the market decide if they want your business.

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avatar Jason Herbert

Folks, this is pretty simple. If we eliminate the emotional responses that many consumers seem to be exhibiting, based on unclear signage or a lack of being informed, we get to some simple realities:

1. Except in situations where basic services are being sold that are necessary for people to survive, the government should not be involved in telling businesses how they can price their goods. The only reason the government is involved in this situation, is the mega-rich banking corporations lobbied Congress to get rules in place to favor their business model. (i.e. They don’t want consumers to see or think about the costs that are involved when purchases are made by credit card.)

2. The assertion that merchants are “charging people more” when customers pay by credit card is absurd. They are charging you what it costs for the product or service, when you pay by credit card. In exchange, the business receives potential benefits (possibly more sales due to more payment options being available to customers) AND the customer also receives potential benefits (buyer protection, reward points, use of the credit extension, etc.)
It’s up to the MERCHANT and the CUSTOMER to determine how valuable these potential benefits are. They are not FREE. Everything comes with a cost.

3. I don’t understand why people think businesses who choose to accept c-cards should be FORCED into making non c-card customers subsidize the c-card customers. Can they do it? Sure. Do many merchants do it? Sure. But they should not be FORCED to do it.

If you’re confused by this assertion, once again understand that nothing is free. When customers pay by c-card, the merchant DOES have to pay more for those sales (BTW: Huge mega-corporations usually pay a much lower rate, while smaller businesses pay a higher rate. So, chock up another disadvantage that the small business owner faces!) A merchant who charges the same price for cash or c-card purchases simply adds this cost to ALL OF THE PRODUCTS. In other words, people who pay by cash are in fact, paying more for the same product so that c-card customers can pay the same price. If the business wants to do that, fine.
But…
If the business wants their customers to pay a price that more accurately reflects the transaction at hand, then they should have the right to incorporate the additional cost of c-cards into their pricing. (And no, I don’t care if it’s called a cash discount or not, it’s the same damn thing.)
And here’s the best part…
We, as a society, can actually allow businesses to do this without hurting anyone. If you don’t like shopping at businesses who offer different pricing for cash or credit, then DON’T SHOP THERE.
But let’s not tell businesses that they cannot price their products and services in a manner that actually reflects the costs.

If I own a business that offers delivery. I can do this two ways:

A. I can charge everyone the same, and offer “free” delivery.
The reality is everyone is paying for the “free” delivery, whether they use it or not. The cost of the delivery will be (secretly) added to everyone’s purchases. So everyone will pay a little more for the product, even if they do not utilize the “free” delivery.

B. I can offer a delivery service to my customers for an additional charge
In this scenario, you only pay for the service you use. The prices of my products should now be lower, as they no longer reflect the built-in, added expense of “free” delivery

As you can see A and B are both perfectly reasonable options. As you can see, customers are paying for the service either way.

I think in a country where we parade our “freedom” around like a trophy, businesses should have the freedom to price their products how they see fit, and consumers should have the freedom to shop at businesses that they see fit.

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avatar screwed over

Pretty funny reading about how little stations make on gasoline. Absurd to listen to the bs The funniest was reading how a drink profit was only a quarter. and the guy who paid 50,000$ a year in swipe fees……only thing matters is the bottom line and you never see these stores go out of business

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