Clark Schinger owns a gas station. Like an increasing number of gas station owners, he is charging his customers who use credit cards a surcharge for every gas purchase. Effectively, there are two tiers of prices: one for customers who use credit cards and one for those who use cash. This is apparently not against the law in any state. Neither is it against the contract with the credit card issuers because the merchants can call this price difference a “cash discount” even though everyone knows it’s a credit surcharge.
Putting deceptive advertising aside for a moment, why do gas stations discriminate against payment method? They say they need to cover their losses. Clark has participated in a few discussions on Consumerism Commentary. Here are some of his latest thoughts:
Simply put, our hands are tied. We can’t really do anything about it… These unfortunate days, most of us, are paying out A LOT more than we are profiting… I make about $50,000/month in gross sales a month nowadays. My profit margin is about… $11,000/month. Out of these profits, I have to pay the mortgage for the new tanks that the GOVERNMENT mandated we put in… about $8,000/month. My electricity is a little over $2,000/month. Then there’s also the general bills such as phone service, fax service, maintenance costs which total to about 500/month. There’s also taxes that the business has to pay which is about 2,000/month. And I’m not even done with all of the costs…
I’m selling gas at cost to me to keep my prices low. If I keep them any higher, the consumers are just going to drive to another station that has same policies but sells the gas for a cheaper rate…
It sounds like there’s not a lot of profit in selling gasoline. If all merchants were to leave the business, that would decrease convenience and probably raise prices for everyone. Any merchant who raises his price across the board at a higher rate than the stations in the local vicinity will face fewer customers.
Merchant fees, paid by retailers to credit card companies like Visa, MasterCard, and American Express, are part of the cost of doing business. Every business that accepts credit cards must deal with merchant fees. It’s rare for other companies to charge different customers different prices, so why can’t gas stations deal with the problem?
If selling gas isn’t profitable, there’s a major flaw with the business plan. Not all gas stations ave convenience stores where products can be marked up for more profit to cover losses due to gasoline sales. Not all gas stations offer a car wash, which is another option for turning a profit.
I understand that the credit card companies charge merchants a high fee for transactions, and this fee can significantly eat into a profit margin when prices are so competitive. Gas station owners should, as a group, try to negotiate with credit card companies to lower this fee. Meanwhile, I plan to shop at gas stations that do not discriminate against payment method, particularly if they use misleading advertising.
Photo: Joe Shlabotnik
Fuelly is a new, free online service which helps you track your mileage. It pays attention to what kind of car you’re driving, how much you’re spending, and creates helpful charts to let you know whether your mileage is improving or declining over time.
It has great support for mobile browsers, which is exactly what I needed, since I can’t be bothered to keep a notebook and pen anywhere sensible in my car. What’s more, it also has a social networking aspect so you can invite your friends to compare mileage trends. There are also dozens of tips for improving your driving style, as well as a user discussion forum.
But I think the neatest aspect is the vehicle browser. For example, this list and graph of Toyota Priuses (Prii?), tells me that some combination of factors is forcing my mileage below the average of Fuelly members. Still, it’s a lot better than my friend’s pickup truck, who just clocked in at under 14 MPG…
A recent Nielsen study revealed that almost two-thirds of consumers in the United States, many more than those surveyed just one year ago, have cut back their expenses, specifically due to escalating gas prices.
According to the study, which queried about 50,000 consumers during the first week of June, when regular gas averaged $3.98 per gallon, 78% of consumers are combining shopping trips, 52% are eating out less and 51% are staying at home more. Consumers are also clipping more coupons, doing more shopping at supercenters and buying less expensive brands, the survey found.
Over the past eight years, eerily coinciding with the time that those in the White House were individuals with very strong ties to oil companies and the energy industry, I’ve seen prices at the pump climb 300%. But unlike the majority surveyed, I can’t say that I’ve changed my spending pattern due to this incredible increase in price. I have changed a few habits to save money, like switching to generic brands for certain items, but I find I am spending significantly more in just about every category compared to my expenses in 2000.
I’ve never been much a coupon clipper. If a coupon happens to find its way to my line of sight, and it’s something I might need in the foreseeable future, I will clip it to my refrigerator door and I may remember to bring it with me on my next shopping trip. This hasn’t been changed by gas prices. I am not traveling less, either.
Have you changed any of your habits due to the increase in gas prices?
Gas prices have consumers cutting back – study, Associated Press, July 17, 2008.
Every week, cash back credit card deals are decreasing. American Express recently emailed me to let me know that they have lowered the cash back rate on their SimplyCash Business Card from 5% to 3% on gas station purchases. If this is your card, it might be time to seek out another deal.
Here are a few suggestions designed to maximize your cash back based on your spending habits.
Blue Cash from American Express.
If you use credit cards for most of your spending, you might like this card. While the first yearly $6,500 of your spending is subject to only 1% cash back on “everyday” purchases (including purchases at gas stations, supermarkets, and drug stores) and 0.5% cash back on everything else, once you pass that threshold, you will earn 5% cash back on your “everyday” purchases and 1.5% cash back on everything else.
Discover Open Road Card.
If you’re not a heavy spender on your credit cards but you’re still looking for the best deal, the Discover Open Road Card may be a good choice. You will earn 5% cash back of the first $100 you spend each month on gas and auto maintenance. In other categories, you will earn 0.25% or 0.50% cash back. Spend more than $3,000 over the entire year and you’ll earn 1% cash back on your spending in excess of this minimum.
TrueEarnings Card from Costco and American Express.
Even if you don’t shop at Costco, this card provides a good cash back bonus. You can earn 3% back on gas, as long as you don’t buy 75 gallons or more in one transaction. There’s no yearly limit to this cash back, however. The catch here, as you might have guessed, is that you must be a member of Costco in order to qualify for this card.
As with any rewards-offering credit cards, taking advantage of cash back depends on your ability not to carry a balance, accrue interest, or pay late fees. Any method of using a rewards credit card other than paying the balance in full every month will negate any benefit offered by the issuer.
Here is the third part of the list of gas stations in New Jersey that are ripping off customers. For more information, see this first part and the second part.
The first part also contains a map of every gas station fined for violation of a variety of regulations.
This list begins with Morris County. [click to continue…]
Here is the second part of the list of gas stations in New Jersey that are ripping off customers. For more information, see this first part. The first part also contains a map of every gas station fined for violation of a variety of regulations.
This list begins with Essex County. [click to continue…]
If you buy gasoline in New Jersey, you may want to avoid the gas stations listed in this article. The New Jersey Division of Consumer Affairs has fined 350 stations out of 1,025 total inspected during a recent three-day operation across the entire state. Most of the stations fined were guilty of innacurate pump calibration, providing customers with less gasoline (fewer gallons) than appear on the pump’s display.
Other violations include inaccurate octane ratings, missing registration, prices posted incorrectly and multiple price changes in a 24-hour period.
Here is a map of the stations cited and fined, and you can find out the violations for which each station on the map is guilty by zooming in and clicking on the marker. For a list of all stations in violation, read this full post.
If you believe you see a violation in New Jersey, call the Division of Consumer Affairs at (732) 815-4840.
Continue reading for the full list of gas stations in violation, grouped by county. [click to continue…]
Last June, I noticed that a few gas stations in my area were charging different prices for gas depending on whether your method of payment was cash or credit. My biggest problem was that this wasn’t advertised on the large signs attracting drivers to the station. The station later changed its signs, though the cash price appears in the spot where one would normally see the “regular unleaded” price, and the credit price appears where one would expect the “plus unleaded” price. The labels “cash” and “credit” are only legible up close.
This “cash discount” is a joke. The cash price is the competitive price relative to other local stations and the credit price has increased more significantly. This is just a sneaky way of getting around Visa’s and MasterCard’s requirements for merchants not to charge more for customers who use credit cards. I am aware the credit card companies charge transaction fees that can cripple gas station owners who make very thin profits on gasoline, but this is not the answer, particularly if they must run misleading advertising to compete with other stations.
The price discrimination first occurred shortly before I moved to a new town, so I didn’t have to deal with it at that time. Once I moved, I found a local, low-price gas station on my daily route that did not offer a “cash discount.”
Last night, I pulled into my low-cost station on the way home from the office, just like I have been doing several times a week for the past 11 months. As pumping our own gasoline is against the law in New Jersey, I asked the attended to fill up the tank. It wasn’t until the tank was almost full that I glanced at the sign on top of the pump to see how high the prices increased over the weekend. I noticed there were two sets of prices, one for cash and one for credit.
Curses, foiled again. Some time in the past few days the owners of this Raceway gas station decided to offer a “cash discount” as well, just like the Valero station near my old apartment. The large sign attracting drivers to the station had been changed to list cash price first, followed by credit price in the “plus unleaded” location, with small labels reading “cash” and “credit.”
The price difference between cash and credit was ten cents. I’m considering opening up a CitiBank Driver’s Edge credit card, like this one for students, currently offering a 6% cash back rebate on gasoline purchases. That rebate would make up the ten cent difference and more, but I’d rather not open more credit cards.
I’d also rather not carry around cash for fueling my car, considering it cost almost $40 to fill up last night. I would save $2.00 to $3.00 a week by paying with cash. All other gas stations are either more expensive or out of the way. Perhaps I’ll try cash for a while, but I’ll have to get used to withdrawing about $100 more than I usually do each week. If I adapt, I’ll have perhaps an extra $150 saved after one year.
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