Yechial wants to know why his Chase BP Visa card, which offers 5% rebates on gas purchases, costs him more to use at BP stations than if he pays with cash. He asked a BP station owner in Pennsylvania about this and the station owner told him it was because credit transaction fees had gone up—”When I told him that I would report his station to BP and to Chase Bank, he said, ‘Screw you! I don’t care, report me. They are the ones charging us more money for the transactions.’”
Now Yechial wants to know, are BP stations simply charging more to negate the 5% rebate on the Chase BP card, or are they really dealing with higher fees on their end? This L.A. Times article published last week says it’s the second reason—which means any rebate your credit card promises you on gas purchases is going to be inherently less valuable so long as expenses keep rising for station owners.
From the L.A. Times article:
Gas retailers are being hurt by several forces, including lower sales, higher credit card fees and fuel expenses, that are directly tied to this year’s dramatic rise in the price of oil.
In Van der Valk’s case, fuel sales have fallen as much as 10% as customers cut back on driving. The lost volume means fewer customers flow through the convenience store to buy coffee, sodas and other money-making items.
With each price increase, more people use credit cards to buy gas, taking a bigger bite out of station profits. A dealer typically pays a 10-cent transaction fee plus 2% to 2.5% of the total fuel sale for each customer.
Yechial writes, “I have told my wife to no longer use BP gas stations, and we are canceling the BP credit card.” It’s probably not the station owner’s fault he’s having to charge more, but we agree that if the only reason you got the BP card was for the gas purchase rebate, you got a bum deal. (But so did the station owner.)
“Soaring costs are squeezing gas station owners too” [Los Angeles Times]
(Photo: Yogi)
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A gas station over on OBT in Orlando does the same thing. The advertised rates are for cash only.
Fantastic! So people who are getting wiser to the cost of borrowing and do things like pay off their debts to avoid interest charges get hit indirectly by the “poor” credit card companies. It doesn’t seem to matter what you do; these financial parasites dig deeper into your pocket.
@nforcer: Sorry, yesterday evening the “average” price in Western Washington State was over $4.30… Maybe Chicago is no longer the highest prices.
As to the cash/credit price difference, while I understand the “small business” problem with the excessive card fees, as a handicapped customer, until those small businesses come to ME to take my money instead of sitting smugly 50 feet away in the comfort of their station waiting for me to deliver it to them, I’ll continue paying at the pump with a card.
I keep all of my receipts and check the gas purchases when the statement arrives. So far I haven’t run into this, but I will be watching. I know its tough on them but its also tough on us, and everyone is to blame.
The Gov’t for NOT forcing the CAFE #’s up to where they should be, Automakers for not voluntarily upping their fuel economy and us for not carpooling and making better use of our resources.
Its funny I was standing next to a group of older guys saying how we can get all the oil we need in Alaska. Well here are a few bits of info. First how long before that “mother load of oil” starts flowing, I would haszard a guess YEARS, like many years. Next do you really think the oil will flow down to us because its in Alaska. Duh, uh no, it goes to the highest bidder so that means we don’t get cheaper gas we get higher gas prices.
Finally there is only one place left in our country that has not been obliterated by our stupidity (yes I own an SUV, yes I carpool to save on gas permanently, yes I live in the country and have crappy winters). Should we destroy that or find ways to be more efficient. I say be more efficient and find better ways to make ethanol and make it a requirement like Brazil did 30 years ago
Gosh, I thought the cheaper-for-cash pricing structure had gone the way of the gooney bird back in the ’90s. At least for now, that’s one thing Oahu drivers don’t need to worry about. We won’t talk about the way that some stations are upping their prices daily. Biggest jump I saw this week was one of the cheaper stations boosting ppg by 5 cents one day, 8 the next.
And while we’re at it, anyone else feel that the little 9 hovering after the prices just adds insult to injury? Really, don’t they think we know that $4.42-9/10 is really $4.43?
So – my question is – if the station offers a discount on gas by using cash, are they obligated to offer the same percentage discount on items within the store to keep true to their merchant agreement? This could be fun…
eh, do the math. the Citgo I mostly use charges 5¢ a gallon for credit cards. I get 5% back with my Amex Blue Cash card. that’s 23¢ a gallon back for $4.65 premium (my car requires at least 91 octane). I’m ahead using the card.
not sure how Amex makes money giving that back as I never carry a balance and there’s no annual fee with that card, but whatevs, I’ll take it.
It could be the fact they’re using a rewards card too. I work in the payments department for a large ecommerce company (>150 million a year on credit cards), and we get reamed when people used “rewards” cards.
Normal credit cards and debit cards cost us about 1.85%, but anytime someone uses a “rewards” card our rate jumps to 2.0%-3.5%. I bet most gas card sit at an ugly rate, too.
I’m really shocked at how many people are coming down in support of the credit card industry here. To me, it’s quite intuitive; using a card costs the business owner, so he has motive to encourage not using a card.
I already use cash for groceries and entertainment portions of my budget. If cash discounts become prevalent enough that I can count on finding one, I will probably begin extracting my gas budget in cash too and using it instead.
Cash is great. Not only is it more convenient (for most things besides gas), no one can track your spending habits or ask you for ID.
The gas station at my house on the big signs advertise the regular prices, but once you pull up to the actual pump, there is a note that says you will pay an extra fee for using credit/debit card. From then on, i never stopped by that gas station anymore. It is probably the most expensive station in my city.
@opsomath:I was thinking exactly the same thing. I’ve worked in small businesses, and credit card transactions cost.
There are free cash machines everywhere in the UK, use them.
Credit card processing banks have merchants by the cajones, and if you’ve ever seen a statement from one of the processors you’d shake your head.
Besides the cumpulsory transaction fee and discount rate that MC/Visa/AmEx/Novus get, there are also “network communication” fees, account statement fees, settlement fees, etc. etc.
On top of that, there are ADDITIONAL fees or discount rates whenever a business or corporate purchase card is used, and a plethora of discount rates for every level of “rewards” card out there. Use an AmEx Blue Cash card and you might as well be a$$ripping the merchant, they are probably losing money on your gas fillup.
Yesterday when I filled up at my local BP gas station I noticed, for the first time, that they were advertising a .05 discount if you paid cash or paid with a BP gas card or BP credit card. I paid the same way I normally do at the pump with my Visa debit card (no PIN number). I doubt that I would go out of my way to pay cash to save .65 since I would need to go get cash and go inside to pay (which likely would lead me to buying soda or beer or some yummy snack which would quickly negate my .65 savings).
@opsomath:
Cash is so much less convenient for tracking spending than a credit card. With a credit card, I have every transaction there in front of me in Microsoft Money.
This is standard procedure for most of the truck stops around here, I believe. I’ve never seen it anywhere but truck stops, and it’s only on diesel. It’s also flat-out advertised on the sign where it switches back and forth between the two prices.
I thought it was illegal to charge more for credit than for cash purchases?
@theysaidwhat: Your putting some spin on that. They aren’t charging MORE for credit purchases. They are just charging LESS for cash. There is a difference. There isn’t an added charge for using a credit card.
In other words, if you allow the gas station to save the expense of credit card processing (which also takes more time btw which raises payroll costs), they will split the savings with you.
Perfectly acceptable.
I don’t see why people have a problem with this.
Think of it this way:
DISCOUNTS ON GAS. Use cash, and save.
With gas prices so high, you’d think more people would be into saving some money. These days 1% savings can actually add up.
@JustThatGuy3: I know what you’re saying, but personally I found I’m actually more likely to go over budget in a certain area if I use a credit card. Being able to review it afterwards doesn’t get me the money back. I’d rather portion out cash in advance than try to retroactively “keep track.”
Plus, cash doesn’t try to charge me fees or delay applying payments so they can hit me with interest. I am following my New Year’s resolution to minimize dealing with companies whose business model revolves around sitting around waiting for me to screw up.
For all of you saying “report them, it’s illegal, etc.!” its 100% LEGAL.
Back a few years ago I worked for a finance company, there’s a loophole in the laws for this called Regulation Z (or something similiarly stupid, like I said its been a few years). Basically if the merchant says the Cash price is a discounted price, they are NOT breaking the law.
In this case because it sounds like the merchant said he was charging more because he was being charged more (and therefor passing on the cost to him to the customer) yes, by all means report him he’s violating the law. But as long as places say its a discount (which most any place which hires a good lawyer will argue thats what it in fact is, and that the employee was simply unaware of this and explained it wrong to the customer) they will get away with this crap until the loophole is closed.
My AMEX Blue card gives me 1.5% or more back on gas purchases. If a gas station won’t take it, I’m not going to that gas station, easy as that.
I have no objections to stations accepting only cash and giving a discount because of it, but I simply don’t carry more than $40 of cash on me 99% of the time. Those kinds of deals just aren’t options.
@The Rude Bellman: Discount for cash = surcharge for credit card. They’re the exact same thing.
@MakGeek: OK, this is a first, I’m ashamed to live in CT, I can put up with the high property taxes, the fact that most our taxes are tops in the nation, but this is stupid.
legelative types need to keep their butts out of commerce. Credit card fees are part of the “cost of doing buisness”. You’ve got to factor it in into your prices.
Now, as far as rewards cards go, it’s true the merchants shoulder that load but still, it’s the cost of doing buisness.
@Jayski: There is an interchange for debit but it is substancially lower, something like $0.25 and .012 per transaction.
But that brings up a good point, not all cards are equal, so there should be a bank card discount and a non-rewards discount, etc.
ARCO stations in the SF Bay Area charge you to use your ATM card. They don’t take CC either. Even with the fee they used to be cheaper than the other stations but now all the stations are right around $4.50/gallon.
Just do the math. If the card you’re using gives you more cash back than the “rebate” of using cash, then use the card.
Discover is 1%… 1% of $4 a gallon gas is… 4 cents per gallon!
If you have a different card with a better rate, or gas is more than $4, adjust accordingly.
But when you work it out, for me, using a Discover card means I’ll ‘lose’ 1 penny per gallon paying by credit card. I only fill up my sedan about twice a month, tank holds 13 gallons.
So I’m going to fumble around, trying to get/keep $100+ in cash (probably incurring an ATM fee in the process) to save 13 cents per fillup, or 26 cents a month?
Do the math for yourself, see if it’s worth it. For me, it’s not.
@Tijil: Maybe they need to bring back those little booths that were positioned between the pumps that had someone you could pay without having to walk into the station. This might help discourage some drive-offs at stations that don’t make you guess (pay) before you pump. As long as they don’t sell lottery tickets at the booth it would make paying cash more convenient again.
I guess most of you folks have a really short memory about the whole “cash discount” bit at gas stations. 20 years ago, it was hard to find a gas station that DIDN’T have a separate price for cash and credit. I’m sure alot of these laws that sucked up to the CC companies are probably why alot of the dual pricing went away. Lord forbid a business owner try to recoup the extra cost of using what is a convenience form of payment.
@thesabre: The problem is, when you call tghe bank (Chase, for example) They have no idea what the hell you’re talking about. They think you are looking to dispute a charge. It is VISA’S rule, not Chase’s, and THEY should be regulating it. As I said, I reported several stations, MONTHS ago, and they are still doing the same thing. My guess is the reports went into the circular file
@johnfrombrooklyn: you sound like the kind of person that regularly has someone else’s wang in your mouth. If you READ (I realize that’s expecting a lot from an uneducated twit) what I wrote, I said that the cheaper stations ARE RIGHT THERE. BEFORE AND AFTER the more expensive ones. And I’m sure pea-brains like YOU are sitting in the more expensive ones because you’re TOO stupid to read the sign. And you also just pay your bills without lookint at them, and you probably have 2 AOL accounts too. YOU are a corporate scumbag’s wet dream, and the reason everyone else pays more.
Is there any reason why the merchant can’t put it on the receipt? “Using your credit card made this purchase $3.12 more expensive!”
@barty:It’s not ‘a convenience form of payment’. It’s a smart form of payment. I use my debit card for darned near anything and everything. It’s safe, I get points, and if it is lost or stolen, I can make it unusable in about 30 seconds. Unlike cash, which is simply gone if it’s stolen…
Doesn’t anyone remember Exxon in the 80′s and into the 90′s offering a cash price for pumping gas? They no longer do it, at the stations I frequent anyway. They now have a discount if you purchase a car wash with your fill-up.
@MFfan310:
@WraithSama:
@mac-phisto:
@masonreloaded:
One piece that’s missing in all of this is the interchange fees set by Visa and MC is actually an issue of price fixing and anti-trust. There are many many antitrust cases going through courts throughout the world on this very issue, and there have been settlements, etc. Interchange rules were changed in Australia a few years ago, actually.
I happen to know a lot of straight up free marketeer economists (like, literally studied under and still revere Friedman) who are running analyses and testifying unequivocally on the side of merchants.
It’s exactly because merchants will usually lose volume by not accepting credit cards that this is price fixing. I… could get into the whole structure of the four party payment systems, but I’m not sure how necessary it is. A lot of it has to do with how payments flow through “members” of Visa and MasterCard and then the rules which are set. Interchange fees are supposed to go back into rewards programs (which may or may not be true), but their very existence raises prices on goods for both those who use plastic and those who use cash. The interchange becomes a cost of doing business which has to be accounted into price, just like fuel does.
And any merchant can tell you that there is no actual choice between Visa and MC. A lot of merchants don’t take AmEx because they have higher fees — that’s a reasonable and effective market decision. Some people don’t take Discover, etc., because the market penetration is too low, so it makes no sense on a volume level. But in antitrust terms, Visa nd MC control the market and pricing structures to such an extent that there is no market. They dictate the interhcnage fee.
The fact that they’re doing this to gas stations at such an exceptionally high rate is really telling. They’re running the risk of alienating both users and merchants, but they must really want a piece of those sky rocketing gas prices. I wouldn’t go so far as to say that it’s parasitic gauging, but it may be.
One of the gas stations around here had this handwritten sign at the register that said something like “credit accepted, cash preferred. if you must use plastic, use debit.” There was something else about them having to raise prices the more people used credit cards…it was really strange.
@nforcer: “Highest prices in the nation.” Pish tosh.
$4.499 is a great deal on regular where I live (Greater San Francisco). Costco is maybe $4.439.
Bow to the price gouging masters.
@savvy999:
Discover has a 5% cashback bonus for gas from July to September, but you have to sign up for it on their web site. You can do so now.
The station I usually use was the last one in the area to switch to the separate credit/cash pricing. Last I checked, cash was 3.93 and credit was 4.07. At 5% back it would be worth it to use a credit card.
As for the legality of separate cash/credit pricing. There used to be separate pricing many years ago (I’m talking at least 25). At some point gas stations switched to using the same price and just ate the few cents they lost per gallon due to credit card fees. Many tried to make it up by opening convenience stores, service stations or (in my area) a Subway restaurant. With gas getting more and more expensive and station owners only making a few cents per gallon as it is, all their profits were being wiped out by credit card fees.
Another problem in my area (NJ) is that it is illegal for gas stations to sell gas for less than they paid for it, which means they can’t offer “sales” or “discounts”. So stations whose main profit doesn’t even come from gas, can’t lower their prices.
In the end the main problem is the oil companies who take the lion share of the profits from gas. Both the customers and the gas station owners get screwed. This is why ExxonMobile is selling off 20% of their gas stations to 3rd parties, because stations are not profitable.
@boomerang86: “Credit card processing banks have merchants by the cajones, and if you’ve ever seen a statement from one of the processors you’d shake your head.” A big +1 to you.
Don’t dump on your local gas-station owner. He’s working on the same margin – lets say .10 per gallon. “Some” of the franchise, network and bank processing fees are based on “% of sale” NOT “% of that 10 cents”, so when the sale is $42.00 vs $22.00, he’s getting nicked MORE out of his measly profit to cover the V/MC and card fees.
Dump on Congress and the oil companies, but not your local gas jock, please.
@Michael Bauser:
I live in Woodhaven and I ended up getting that promotional .99/gallon gas for up to 12 gallons last week. I had gotten there early enough that I had to deal with maybe a 15 minute wait. It was cash-only, but that’s because it was some thing for a country station.
But, if you go down Dix-Toledo in Lincoln Park, you’ll see all the Cash/Credit gas stations. My boyfriend lives in the area and I was amazed to see that. Now, wherever you go, you see the Cash/Credit. It bugs me that the difference in cost is usually .08/gal since I carry my debit card instead of cash.
I had never heard of gas stations charging more for credit card transactions until I drove from New Jersey to Los Angeles. Given the high price of gas, I had to pay with a credit card, and only went to the stations that did not charge extra.
What I don’t understand is how gas stations are able to get away with charging more for using a credit card (in violation of their contracts with the credit card companies) while doing is so blatantly — every sign has two different prices! Are they just putting faith in the fact that consumers 1) don’t know anything is wrong with the practice and 2) if they do know it is wrong, won’t do anything about it?
It seems to vary in Tampa, FL as to if you’ll see the “CASH PRICE” label on a sign or not. Generally see it in the shadier parts of town (across from University Mall / Suitcase City / Ybor) and not much in the better areas (Westshore/Bayshore/etc). I can’t say I’ve ever seen it in Ft. Myers / Naples, FL.
Re: gas prices, gasbuddytogo.com on your mobile phone will give you the prices in your area. Better to know what the prices are before you finally reach the running-on-fumes and get stuck giving business to a shady station owner.
Fine…if a gas station wants to keep $10,000 of cash around ($50 x 200 cars), let them. Just don’t cry to me when robberies soar through the roof.
@liquisoft:
The Shell station on the corner of Brookhurst and Talbert offers a cash discount, AND if you use your Citibank Shell Mastercard, you can get not only the cash discount price, but the 5% rebate later on in your monthly statement.
try that place instead…
-> Yechial writes, “I have told my wife to no longer use BP gas stations, and we are canceling the BP credit card.”
Unless he has an annual fee on the BP card, he’ll have a higher FICO score if he just puts it in a drawer than if he cancels it. In fact, he ought to ask for a credit line increase every year.
The longer he has the card, the more it’s worth, FICO-wise.
This is against the Visa/MC merchant agreement, AND against the law in Texas(fee/charge for using Credit Card) — Unless they word it as a “cash discount” which can be dis-proven if paying by check is the same price as cash, but then again I suppose they could have a Check Discount that happens to be at the same rate as that of the Cash Discount. But it’s so simple to prove when it ONLY applies to gasoline and not other things in the store such as sodas.
Awesome word play – “cash discount” and “credit card surcharge” sound about the same to me.
I encountered this price scheme earlier this week at a local station when I went to fill up. The price was $4.15 on the sign, but when I got to the pump it said it was $4.21. Then I saw the sign – you guessed it, “cash discount.” I was a little peeved about it, but filled up using my Visa branded debit card anyway.
The only one this will be hurting will be the credit card companies, because people will start using cash more often. More cash, means less fees, means less money. If the credit card companies don’t close their “cash discount” loophole, you’ll start to see fees and interest rates start going up before your eyes.