Reader Brian wants to know how to tell a “surcharge” applied to a credit/debt card transaction vs a convenience charge?
To that end he sends this above example of a sign he saw at a gas station. Is this type of charge allowed?
Brian writes:
Under the VISA rules, how do you tell a “surcharge” applied to a credit/debt card transaction vs a convienence charge?
My wife recently went to get gas at a local gas station that was historically the highest priced gas in the area. Upon pulling up to the tanks, the actual low price was modified up by .10 a gallon for using any non-cash method of payment. Under MC/Visa rules, this looks to be prohibited, but how can you tell?
She didn’t know any better and got gas there anyway, but when she got home I knew it was fishy.
Brian, you were right to think this was fishy. Gas stations are supposed to advertise a “cash discount” rather than a fee for using a credit card. This prevents people who pull over because they saw the posted price from getting an unpleasant surprise when they go to pump their gas. You should report this gas station to your credit card company.
An article from the Houston Chronicle shows that a some gas station owners don’t understand their credit card contracts:
Bolduc said his contracts with the credit card companies forbid him from offering a discount for cash.
LeLacheur said some stations have contracts that allow them to offer a cash only discount and those discounts are becoming more common.
Other stations simply defy the credit-card company and let the company sue them, he said.
Visa Inc. and MasterCard Worldwide said in corporate statements that retailers, including gas stations, can offer a cash-only discount.
Visa said the cost of accepting credit cards is set by oil companies, not by Visa.
A “convenience” fee only comes in to play when the business normally doesn’t accept credit cards. Clearly, this doesn’t apply to gas stations.
For a more in depth explanation of the rule, click here.
Card fees can eat up profits at the pump [Houston Chronicle]
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Maybe the gas station owner was thinking “What’s the difference, 10 cent discount or 10 cent surcharge? It’s still a 10 cent difference.” He probably doesn’t see what the problem is, and why the rule is in place.
This exact thing happened to my husband a couple weeks ago. He saw a lower price, pulled into the pump, and when he went to pay he say he’d been duped – the huge price sign was for “cash only.”
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I was once supposedly charged a surcharge just for using my debit at a store and when I went and checked my bank account my bank voided it. That being because I’m in an account that’s not supposed to have those fees charged to them. I don’t think this is allowed, and it’s just the company trying to make more money from the gas, which is already more expensive than it should be.
@FightOnTrojans: Actually, Arco knows that they can’t charge their fee on credit cards… so they only take debit cards. Clever chaps there.
My local Shell is only about 3 cents more per gallon than Arco, and when you figure in Arco’s debit surcharge, they actually end up cheaper. So I used to go to them, before I got a Costco card.
um maybe I am dense, but the advertised price on the sign is the price. If you use a credit card, the station is charged, so you are charged for that cost. Why do they have to post credit card prices? So people dont know they are paying extra just for using a credit card?
I hate it when they have that sign at food joints and charge you like $1 when you get food. Fuel, I am already in 70. I could care less about .45. Its the five dollar burrito becoming six because I didnt go the ATM I hate.
@Ragman:
I live in Texas and I don’t think I have seen anything but 87-89-93 in YEARS! I go to Dallas every now and then, but I haven’t been to enough stations to comment on the “super” pumps. Seems like a lot more choice than anyone would ever need.
I put 87 in my car (Infiniti G20) and 93 in the Nissan Quest Minivan. I stick with the owners manual (91, but hey, that isn’t available).
Holy cow I’ve never seen people so pissed off over this.
The reasoning is obvious: the owners don’t want to lose even the fractions of cents they make on gas to credit card processing fees, and if you pay in cash you usually have to go in..and you might buy something extra like some snacks where they make more than just fractions of cents. From a small business owner perspective, I can’t blame them. They’re getting the short end of the stick from both the customers and the company, since a lot of gas stations are franchised/owner owned..
Then again, most of the gas stations doing this in LA usually make it obvious there are separate cash and credit prices with signs that display both pretty clearly…Hmmm.coul
@Askiba: Actually, gas stations profit margins on the fuel are razor thin. The card fees eat up their 1 or 2 cent profit on a gallon of gas and turn it into a 1 or 2 cent loss, and the “Pay at the pump” facility takes away their opportunity to make a real profit from you making an impulse purchase at the convenience store inside. Stations are closing left and right where I live, about 1 in 8.
“In Pennsylvania @ least I know that it is illegal to charge more for a credit or debit purchase …
HOWEVER, it IS legal to offer a cash discount.
subtle distinction.”
In CT that’s how it works also. However, I’ve noticed that the gas stations that offer a “discount” have actually raised the price of their gas.
For instance, I can go to Cumberland farms and pay 4.29 with my card.
Down the street there’s a gas station that charges 4.39 a gallon with credit cards or 4.29 for cash. The best part; a week ago that same station was charging 4.29 for cash or credit. But some people with fall for this scam and walk around with hundreds of dollars in cash that they could easily lose or have stolen.
@AustinTXProgrammer: You have to get off the beaten path. I noticed them driving Hwys 380 and 180 through west Texas in the small towns. I put premium in my bike, so I noticed the 93 to 91 drop at the first stop. The big super multi pumps aren’t that common, but I had never seen one before. I can’t remember the station where it was at, although I want to say it was a Shell. My guess is that the spread does two things: one, allows a cheaper “regular” price on the board, since it’s 86, and two, teases you to bump up the octane for a few pennies more. Our cars take 87 min, and that made me wonder about how many would think regular was 87 and end up putting 86 in the tank.
I’ve noticed that many places don’t post the premium price on the road signs, so the biggest selling point is their regular grade price. In the past, you could generally assume that the spread was $0.10 between the grades, but as prices rose, I noticed the spread growing to around $0.15 between grades, and even to different spreads, with the jump from mid to premium higher than regular to mid. I figured that the stations were tacking on a extra cent or two of profit that way, although I could be wrong.
@SBR249:
Why on earth do you assume I’m against credit cards? I love using them.
The problem is that the cc companies *prohibit* disclosure. If the store wants to absorb the costs of cc processing because they think it improves business, that’s perfectly fine with me. However, they should not be *forced* to charge the same amount for cc vs. cash. The CC folks must have bribed the government plenty to get that law passed.
@FightOnTrojans: In South Jersey, most gas stations I see are hovering around $3.85. And we can’t pump our own gas, so they also have employee costs to consider.
Also, since we can’t pump our own gas, the whole idea of people going inside and getting snacks and whatnot while they’re paying is right out the window.