Gas Station Bans Credit Cards Because Of High Fees

It’s not only the customer who is taking a hit from high gas prices, some gas stations’ profits are being entirely mitigated by credit card interchange fees. The AP reports that gas station manager Roger Randolph was fed up with losing money on credit card fees. His solution was to place new signs on his Chevron gas pumps that read “No more credit cards.” Details, inside…

The article says,

His complaints target the so-called interchange fee — a percentage of the sale price paid to credit card companies on every transaction. The percentage is fixed — usually at just under 2 percent — but the dollar amount of the fee rises with the price of the goods or services.

As gas tops $4 a gallon, that pushes fees toward 10 cents a gallon. Now stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits shrink or even reverse.

In a good month, Randolph’s small operation would yield a $60 profit on gasoline sales. But that’s been buried as soaring prices forced the station to pay about $500 a month in interchange fees.

“At these prices, people aren’t making any money,” said Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores. “It’s brutal.”

Many gas stations across the country have dealt with this issue by offering discounts on cash transactions which is not a perfect solution explains the spokesman for the National Association of convenience stores, “The problem with cash discounts is, if people don’t have the cash or don’t want to spend the cash, you’ve inconvenienced them.”

Another avenue being explored by some gas station owners is finding less expensive credit card companies. Tom’s Convenience stores in Pennsylvania has started using a new credit card company called Revolution which charges smaller interchange fees. Customers who use the card get an automatic 10 cent discount.

The National Retail Federation says that the recent surge in gas prices has focused attention on to what they believe is an underlying problem with credit card fees. They say that even though the price of gas has gone up, the cost of processing credit and debit cards stays the same. “We have always contended that it doesn’t cost Visa and MasterCard any more to process a $1,000 transaction than it does a $100 transaction,” said J. Craig Shearman, vice president of government affairs at the retail federation.

Currently, there is pending legislation in Congress which would allow merchants to bargain collectively with the credit card companies. Other legislation focuses on requiring credit card companies to explain how they calculate their fees. Unfortunately, approving and enacting such changes will probably take some time. So until there is any change in the structure of interchange fees, it seems that customers and owners will continue to experience pain at the pump.

Some gas stations banning credit cards [AP]
(Photo: Getty)


Edit Your Comment

  1. thetango says:

    I’m not even sure this is newsworthy. There are a few gas stations around here in the Greater Metro Boston area that are cash only — and they’re 10 to 15 cents cheaper per gallon than stations that accept credit cards.

  2. coren says:

    “The problem with cash discounts is, if people don’t have the cash or don’t want to spend the cash, you’ve inconvenienced them.”

    You have? How? You shouldn’t be advertising the lower price unless you advertise both, so the person won’t know about it until they get there. If you advertise a cash price, then don’t offer it for everything, that’s a surcharge for using credit. That whole mess is on shaky ground to begin with. I don’t blame people for taking away the credit option – but that’s the real inconvenience. I can’t think of a place I don’t use my debit card anymore (except the local store that machine stamps things, and that’s as a courtesy to them because they’re great and they asked), so having the option taken away? It’d piss me the hell off (thankfully, the bus is free for me…)

  3. krunk4ever says:

    As gas tops $4 a gallon, that pushes fees toward 10 cents a gallon. Now stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits shrink or even reverse.

    Maybe instead of marking it up by a fix amount, you should try marking it up by a percentage. Just a thought…

  4. doctor_cos wants you to remain calm says:

    This is tough, because how can you feel sorry for gas stations ‘not making as much’ on gas? Just mark up the 20 oz Cokes to $1.79 instead of 1.69. Or change the dates on those sandwiches so you keep ’em in the cooler another couple days. “Yes, some chicken IS green, sir.”

    Although the gubbamint is just as good at the “we sure didn’t see this coming” lie.

  5. Lambasted says:

    He is only hurting himself. Many people don’t carry cash nowadays, especially not the extra $50 needed to fill up. A cash discount isn’t going to do anyone any good when they are on “E” and all they’ve got is a credit card in their wallet.

    Moreover, gas stations are a dime a dozen. Throw a rock, hit 10 of them. Around here, there are gas stations literally right next to each other. If a gas station doesn’t serve my needs, I drive 5 more seconds to the next one. Beep-beep, goodbye.

  6. ShadowFalls says:


    It certainly is. It relates the troubling part of the economy, hitting the small business owners yet again. If they stop taking credit cards, it reduces the business they get. If they don’t, they have little, or no profit, or even costs them money.

    Most of the problems with the economy and stories mentioned on Consumerist regarding price increases and shrinkage, are a direct fault of the oil companies, who continue to profit.

  7. mike says:


    Maybe instead of marking it up by a fix amount, you should try marking it up by a percentage. Just a thought…

    The problem with gas is that the mark-ups are razor thin to begin with. If you do it by percentage, it increases gas prices even more, forcing customers to shop elsewhere.

    Gas stations don’t make money on gas; they make money on the food that they sell there.

  8. freejazz38 says:

    Of course, the greedy oil companies, who PRODUCE the gas that the stations sell could cut their CEO pay a little and help out the very stations that are feeding their greed…… naaaaaa

  9. mac-phisto says:

    “We have always contended that it doesn’t cost Visa and MasterCard any more to process a $1,000 transaction than it does a $100 transaction,” said J. Craig Shearman, vice president of government affairs at the retail federation.

    sure, it doesn’t cost any more to process the transaction, but what does cost more is a $1000 fraudulent transaction vs. a $100 fraudulent transaction. that’s what interchange fees are all about & i don’t think retailers fully comprehend that.

    card issuers eat almost all fraudulent transactions & spend enormous amounts of money on technology to combat theft. none of this is borne by retailers. yet, they want an “as good as cash” payment service with zero cost. yeah, good luck with that.

  10. Logan26 says:

    @doctor_cos: You are aware that convientmarts that also sell gas would have to raise prices by more than 10c on everything which would lead to fewer sales then they already get. Most stations like that, that are busy do maybe 8-12k sales in gas, if they are lucky, they’ll do an additional 2k in sales from the mart side of it, if they are lucky. Most only do 500-750 in extra sales so that would help to slightly reduce the hurt, but not prevent it. And dont forget alot of those sales are also from CC/DC as well.

  11. juggler314 says:

    Interestingly the cheapest gas station close to NYC is right over the holland tunnel in NJ. It’s a cash only place, about 4 cents cheaper than the other dozen stations over there. Yet it’s often empty, people just don’t seem to like to pay cash for gas.

  12. Logan26 says:

    @mac-phisto: Yeah, because the CC companies need to make even more money than they do now.

  13. boomerang86 says:

    This is actually a great time to go back to a “cash only” market for fuel sales. The stations can keep using their “pay at the pump” card readers, just program them for DEBIT CARD, PIN ONLY sales (Aldi food stores have been doing this for years, and not accepting credit hasn’t hurt THEIR sales)! They can keep their price competitive with the other guys AND keep more profit.

  14. Logan26 says:

    @juggler314: I find what is even more funny is that people who refuse to use caash to pay for things such as gas, end up paying much more than that in the end. Use your CC to buy 75 bucks in gas, by the time you pay that off the CC it’s more like 100 bucks. AMEX owners being the exception as most follow the pay it off end of month scheduel.

  15. bohemian says:

    I predict that convenience store robberies will drastically increase if this starts becoming common. Probably more personal thefts around gas stations. Knowing that everyone coming to that station would have $50 to $200 cash in their pockets would just be fodder for thieves.
    Or gas station owners all put in ATM machines that charge $3 to get money out, thus creating another revenue stream for them.

  16. BrookeCossus says:

    when your paying 80-100 dollars its understandable. I never carry
    more than 40 on me these days, 40 wouldn’t even pay my subcompacts
    tank these days… When I started driving 40 was enough for me for a
    whole MONTH of gas + a snack, and that was 10 years ago. The minute
    gas hit 2 bucks people should have been breaking down the gates and
    hanging the CEOs by their necks while burning down their 4 billion
    dollar mansions… at 4 bucks we are still talking about if its their
    fault, despite OVERWHELMING evidence its the Federal Government and
    Gas companies in collusion.

    I mean jesus Bush’s whole fucking press release yesterday was
    probably written by the oil companies themselves! WAKE UP PEOPLE!

  17. artki says:

    > Maybe instead of marking it up by a fix amount, you should try marking it up by a percentage.

    Many gas stations have the prices set by the oil company. They’re the ones who decide that the margin will be only 11-12 cents. If the guy raises the prices more than that, he’ll have problems getting his next delivery – or his next delivery will be more expensive.

    Completely independent gas stations have complete freedom in setting their own prices but they don’t always have a reliable source of gasoline at a competitive cost.

  18. SadSam says:

    Don’t mess with my Visa stock.

  19. Jon Mason says:

    I said it on the last credit card fee story and I’ll say it here too: Yes you may “lose” a couple of percent on a CC transaction, but by refusing to take them you will lose far, far more customers.

  20. @mac-phisto: card issuers eat almost all fraudulent transactions & spend enormous amounts of money on technology to combat theft.

    I have to disagree with this. It seems to me that credit cards companies keep doing things that make it easier for thieves to make fraudulent transactions – although I can’t understand why.

    My first gripe is with RFID-enabled cards. What the card issuers have now done is make is possible for a thief to steal your credit card without taking your wallet or even touching your card! All they have to do is pass an RFID-reader somewhere near your butt and they can make an exact duplicate card (in the sense of the RFID transmission it constantly broadcasts). And with RFID readers at checkout lanes, the cashier wouldn’t even have a chance to see that someone is waving the Park Place card from Monopoly that he stuck an RFID chip on. All for the sake of saving a half second at a checkoutlane because of not having to swipe the card through a reader?

    Another way card issuers have set themselves up for more frequent fraudulent charges is by sending already-activated cards to account holders. If it were to become common knowledge that Chase sends Visa cards (just as an example) already activated, it’s extremely easy for it to never show up in your mailbox and the card be used and ditched even before you and the bank knows it was stolen.

    I am happy that consumers have been released from almost all financial liability from fraudulent charges; and I agree, obviously, that the banks have to eat that money. So my question is, why do the banks keep making it easy for thieves?

  21. @Logan26:

    I find what is even more funny is that people who refuse to use caash to pay for things such as gas, end up paying much more than that in the end. Use your CC to buy 75 bucks in gas, by the time you pay that off the CC it’s more like 100 bucks. AMEX owners being the exception as most follow the pay it off end of month scheduel.

    Not everyone who uses a credit card carries a balance. I pay mine off every month, and haven’t ever paid a cent in finance charges.

    AMEX also has many cards now that can carry a balance month to month, and don’t need to be paid off monthly.

  22. kc2idf says:

    Given that the merchant agreement with the credit cards prohibits a different price for credit than cash, this is a predictable outcome.

    Of course, an easy way to get around the merchant agreement issue is to open two stations, across the street from each other, one that takes credit cards (and charges enough to make a profit) and one that takes cash only. Then, train the staff of both stations to be able to explain why the station across the street has such a different price. This would then get the idea across to consumers that “free” isn’t free.

  23. Murph1908 says:

    If my station did that, it would drive me away just like a cash only place would. Most banks charge for PIN transactions.

    AMEX owners are not the only exception. My cards are paid off online within days of the charge posting.

    The other problem with cash-only places is that many (and probably most) of them still require you to pay before you pump. So not only do you have to go in to the store once, you have to go in a second time to get your change, if you want to do a true fill-up.

  24. Letsgohokies says:

    @masonreloaded: Agree totally. I rarely ever carry cash, and would refuse to stop at a store that only accepts cash.

  25. Southern says:

    So basically what you’re saying is, if a Gas Station has a $50 sale of gasoline to a particlar customer, the credit card company takes 2% of that sale, or $1.00, as the “interchange fee”. If we consider that the gas station only makes a 3% profit on the gas in the first place, that doesn’t leave much for the owner of the station.

    And of course the Credit Card companies make it illegal to charge the customer that additional 2%.. (although they CAN offer a discount for cash).

    Q: Do debit cards carry the same interchange fee?

  26. fostina1 says:

    double dipping by the cc should be illegal. they shouldnt be allowed to charge me and the merchant.

  27. ztoop says:

    Everybody seems to be missing the point that when you pay with cash, you go _inside_ the gas station. The products inside is where all the profit is. So gas stations are one of the few places where losing those credit card paying customers (like myself) doesn’t cost them very much.

  28. mac-phisto says:

    @Logan26: if banks didn’t have interchange fees offsetting fraud losses, you wouldn’t have ZERO fraud liability. look at how the ATM networks work – lower flat fee costs that are mostly borne by card issuers. & what happens if someone steals your card & your PIN? you are on the hook for some (if not all) of the fraudulent transactions.

    @heavylee-again: most new technologies are developed & pushed by processors (& VISA/MC in particular), not card issuers. i can’t comprehend why any issuer would send pre-activated cards to account-holders – that’s just stupid, but the RFID program is marketed to card issuers by the middle men that control the network.

    @Southern: A: no, there’s a different fee structure (& it’s generally much lower), but one thing that no one seems to be discussing here is equipment/processing costs, which is separate from interchange fees.

    merchants mostly lease equipment & pay processors access fees (in addition to interchange fees). as with anything else in the business world, the initial cost of access is disproportionately high compared to usage costs. to give a super-simplified example – $200 monthly access fee per network up to 1000 transactions, additional transactions 1¢ each. most small business owners in this case would be paying 20¢ or more for virtually every transaction whereas a large merchant benefits from the volume discount.

  29. The operative word here is “small.” Your large chain stores will still gladly accept your credit card because it makes turnaround faster. Now, what would be swell would be if there was a bill acceptor/change maker that took up to a $20 bill (like in some grocery stores) that would allow cash purchases without having to go inside the store. Of course, this would also be too expensive for the small independent operator.

  30. Dobernala says:


    “card issuers eat almost all fraudulent transactions”

    Nope, the merchant does.

  31. PinkBox says:

    I’m awful. I’ve actually stopped at a gas station before and left without getting gas when I realized they only accepted cash. (I rarely carry more than $20 on my person.)

    The line inside the store was horrendous, and there was another gas station across the street.

    Guess where I went?

  32. Me - now with more humidity says:

    @Murph1908: You need a better bank. I’ve NEVER been hit by a fee for a PIN transaction.

  33. mitchelwb says:

    So margins on gasoline are razor thing… 10-12 cents per gallon. This particular station owner makes about $60 in profit per month on gas. I know times are tough and gas is expensive and every penny counts. But $60/mo? I would think the loss of business by no longer accepting credit cards would cost him more than $60/mo! People are already trying to find ways to stay away from the pump (and therefore the station all together) Sounds to me like he needs to make sure his profit covers the cost of the transaction and pray people bring their credit cards to buy his gas!

  34. alstein says:

    Yeah, if I can’t pay at the pump, that time I don’t have to spend, and not being treated like a criminal, is worth the $0.20 more. I always assume if they won’t let me pay at the pump, it’s because they expect their customers to be criminals.

  35. Bagels says:

    @Steaming Pile: There was ONE Shell station by me that had this about 5 years ago. I can’t remember another one like it and they got rid of it at some point. It was like you describe- basically like a pop machine that takes dollars, you would just feed the cash in at the pump and it would register how much you put in. Granted as others have mentioned if you’re out in the open at night shoveling cash into a machine it might not be the safest thing to do, but at least you didn’t have to go inside the store to pay cash

  36. cornish says:

    usually at just under 2 percent – but the dollar amount of the fee rises with the price of the goods or services

    That’s generally how percentage-based fees work.

  37. Jubilance22 says:

    I agree. My credit union doesn’t charge a fee for PIN transactions.

  38. mac-phisto says:

    @Dobernala: wrong. especially in the case of gas stations. there is ZERO chargeback right to card issuers for PAY AT THE PUMP transactions up to the transaction maximum of $75 (this is why PAY AT THE PUMP is all the rage – ever try to use your card inside & have the attendant send you back outside? this is why).

    other examples – any time you use your card at a merchant & you don’t have to sign (fast food up to $25, grocery store up to $50, etc.), ZERO chargeback rights. merchants that participate in VERIFIED BY VISA have 100% chargeback protection for transactions purchased utilizing the service (& even in many cases where it wasn’t utilized).

    card issuers also have ZERO chargeback right on fake cards.

    yes, occasionally a merchant could be liable for a chargeback. in almost every case they would not have been liable if they picked a better processor. sometimes processors “cheat” the system to provide faster transaction speeds. this is where merchants can really bite the bullet of fraud transactions. but assuming they did their due diligence in selecting a processor, my original point stands – card issuers eat the bulk of the cost of fraudulent transactions, not merchants.

  39. Greeper says:

    I would be shocked if Chevron allowed him to do this…dealers I think are required to accept credit cards in their PMPA Agreements (dealer franchise-type agereements). Unbranded stations routinely are cash only.

  40. @mac-phisto: @heavylee-again: most new technologies are developed & pushed by processors (& VISA/MC in particular), not card issuers. i can’t comprehend why any issuer would send pre-activated cards to account-holders – that’s just stupid, but the RFID program is marketed to card issuers by the middle men that control the network.

    Card issuers have some control over whether they send me a card with an RFID chip in it. In fact, each time I’ve received a card with one in it, I’ve shredded it and called the company to request a replacement one without a chip.

  41. Erwos says:

    Cash discount + ATM machine in gas station == PROFIT!

  42. NoWin says:

    @Southern: “So basically what you’re saying is,…”

    BINGO! That’s what the average consumer doesn’t get yet. It’s NOT the station owner thats making the big money; it’s the oil companies (and Visa & MasterCard Corp) as they get a bigger stake simply as prices escalate upward, and the station is getting less and less profit (and it was never big to begin with) for the fuel as a small fixed mark-up. Heck, my local guy just barely breaks even on the fuel volume after he pays the pump-jockey kids.

    As mentioned elsewhere, they stay in biz via the convenience store or the repair bays. Hoepfully this discusiion will enlighten a few of the “blame the station” people that its not the station that is the bad guy here.

    So people, please don’t dump on your gas stations; unite against the conglomerates for a change….

  43. swags says:

    @fostina1: What double dipping are you talking about? Is there some strange credit card I’ve never heard of that charges the purchaser for every transaction?

    Annual fees, penalty fees, and finance charges are different and can be entirely avoided. If you’re paying them, you’re a sucker.

  44. coan_net says:

    There was a station around here who offered 3 cents off a gallon if you paid by cash. (it has since closed)

    Heck, the gas station I normally visit has made it so I use my credit card twice. They have now made all pumps pre-pay, which means I pay with my credit card out at the pump. I then go inside, by a pop – and also use my credit card….. since they are forcing me to use it twice… I’m going to use it twice.

  45. MsClear says:

    I typically pay with my PIN at the gas station. Does that incur fees for the gas station? It comes straight out of checking.

    I don’t pay in cash for two reasons. First, I don’t want to make another stop at the ATM. Secondly, I only want to remove exact amounts from checking. Don’t want to take out $40 and spend $35 on gas. Sure it’s only $5, but every little bit helps.

    Still, I completely understand the gas stations POV.

  46. Rectilinear Propagation says:

    @Erwos: The only problem with that is that gas stations have those ATMs that charge a fee if your card isn’t part of the SUM Network or whatever it is. That means if you bank with Wachovia or Bank of America (and lots of people do) you’re getting charged a $2 fee on top of whatever the bank will charge you for using that ATM.

    They could convince people to pay using debit if they didn’t leave $100 holds on the card.

  47. chrisjames says:

    @NoWin: You’re right, they’re being pulled in three different directions, but it never should have gotten this far. They’re upset because they got in bed with the credit card companies, only to find out about the herpes when it’s too late.

    It shouldn’t take a price surge to realize you’re being screwed on credit card transactions. They’ve been placid about the situation for years now because it was so easy to pass the cost to the customer, but now they’re pushed to the edge with gas prices and are losing money.

  48. RayDelMundo says:

    “Moreover, gas stations are a dime a dozen. Throw a rock, hit 10 of them. Around here, there are gas stations literally right next to each other. If a gas station doesn’t serve my needs, I drive 5 more seconds to the next one. Beep-beep, goodbye.”

    Not true. This is a full service gas station, not a convenience store. This guy makes way more on repairs than he does on gas.
    There are virtually no full service gas stations around here anymore. 99.9% of the places that sell gas are convenience stores.
    I live a couple of miles from this guy’s station.

  49. savvy999 says:

    Sounds to me like the market is already taking care of this. Gas stations that are unprofitable will close. Ones that innovate (either by finding other CCXaction methods, or going to cash, etc) will survive.

    The hidden gem in this piece is that some entrepreneur has found a niche/need and created a lower-cost CCXaction company. If that works, gains momentum, maybe a couple of others open up in other regions, the big CC companies will take notice and be forced to lower their fees. Problem solved.

    Competition is working here.

  50. The only cash-only stations I see around here in Jersey have pretty much the same prices as the ones that accept credit cards. In fact, there are times where they’re about 5 cents MORE than the CC-accepting stations. So…where’s the cash discount?

    I very rarely carry cash on me and if I do, it’s never more than $20. If I’ve withdrawn cash from the ATM, chances are its for a specific purpose (not gas).

  51. NoWin says:

    @chrisjames: I agree.

    Here’s the rub: who/what is a merchants “alternative” to not dealing with the cc companies. There is no alternative, so I wouldn’t necessarily say it was placid.

    You must contract with “some” supplier in your area, and if you opt to sell a brand under some situations, the brand sets the rules you sell by.

    Visa and MC work “both sides of the street” by charging the merch, and franchising their logo to your local bank for card-use.

    When prices merely rise at a “normal” inflation rate, everyone gets a modest cut. But with wholesale fuel increasing up to 10% on a given day, and averaging a 120-140% increase over a year and a half, that little .10 cents per gallon margin that was your sweet-spot now becomes a major and serious loss-leader.

    “If” (for those that will say just increase your margin) a station says, OK, I’ll mark-up 5% instead of .10 cents a gal, 2 things happen:

    1) some stations can’t do it by contract
    2) the .10 cent gal is already BUILT-IN to the price at the pump, as determined by their distributor’s wholesale cost at the storage port or depot (in New England its Providence and at Boston), so increasing their margin equates with an additional increase of say another .10 cents or more, and you know that higher price won’t look pretty on the sign outside and probably get the station more bad press.

    Then…the cc companies still take a slightly higher percentage cut, your competition across the street most likely will NOT price match, and you sell even less volume as a result.

    Now, if the stations all banded together to increase margins, guess what, we dump on them for being greedy little blood suckers, someone will file a price fixing suit (why don’t they do that when airlines collectively raise their fees?), and then they shut-down due to pricing pressues. We get no gas (unless it’s $9.00 a gal), but Visa/MC still rule the world, and the oil companies still maintain it’s not under their control, and speculators in cushy chairs still make a few mil….

    My head hurts.

  52. CoderCop says:


    “Most of the problems with the economy and stories mentioned on Consumerist regarding price increases and shrinkage, are a direct fault of the oil companies, who continue to profit.”

    Replace “oil companies” with “government” above. The state and federal governments make more on every gallon of gas than the oil companies do. Interestingly, the government is also the primary reason that gas prices are as high as they are by refusing to allow oil companies to find and explore new sources of oil.

    Its simple: Demand for oil based products is climbing and has been for some time. Congress refuses to allow any increase in domestic supply and foreign governments seem uninterested in increasing supply as well. The end result is that prices go up. We can change two parts of that equation. First, we can increase domestic supply by authorizing drilling in oil-rich domestic reserves. Secondly, we can decrease demand by being smarter about oil consumption.

  53. Snarkysnake says:

    My two cents…

    Something is not right here. No question,the little guy that owns the gas station is taking it in the shorts.Hate it for him. business ain’t beanbag.But…

    High profit margins attract competition. Low profit margins repel competition. Visa/MC would seem to have a lock on the market and they will make more money than the guy providing the product.We’ve established that.

    My question: Discover is an also ran. DISTANT third (or fourth)among branded credit/debit cards.This would appear to be the opening that they need to be a player in the big leagues. Harness technology,offer a better deal to the merchant and cut the fees to the point where everybody makes a little coin.This seems not to be the case.They seem to be happy with stepchild status and the merchants that could use them as a counterbalance to the Visa/MC axis of evil just bitch and moan. (Forget Amex- they make their money a different way . They take a higher vigorish than V/MC would dare)

    Anybody ?

  54. anarcurt says:

    I use cash whenever possible. I do not want to support those leaching CC Companies. If I get a discount all the better.

  55. johnfrombrooklyn says:

    Whoever said the card issuers eat most of the fraudulent transactions must work for Visa or Mastercard. I’ve worked for large large retailers and owned my own small retail shop. In 95% of cases, it is the retailer that pays for the fraud, and NOT Visa or Mastercard. Visa/Mastercard makes it so incredibly difficult to get your money back on a fraudulent transations, that most retailers just end up paying it and building the losses into their prices.

  56. henrygates says:

    I’m surprised many gas station owners haven’t just given up and gone on to other businesses. It’s shocking to me that a ‘franchise’ can last so long with such a huge failure rate and such a tiny (or negative) profit margin.

  57. A.W.E.S.O.M.-O says:

    @Southern: @MsClear: Yes, debit transactions also have interchange fees, but they are capped. That’s why PIN pads at retail stores usually default to PIN when you can hit “cancel” and process it as a credit transaction…they usually pay less interchange on the PIN transaction, but the processor makes less money.

  58. peejaybee says:

    I feel for the small operators, I really do, but look at the procedure to fill up the tank:

    Credit Card:
    insert card
    pump gas

    walk into station
    wait in line
    fork over cash
    walk back to pump
    pump gas
    walk back into station
    wait in line
    get change
    walk back to car

    Yeah, I could just guess how much gas I need and pre-pay that amount, but unless the cash-only guy is offering a HUGE discount, it’s not worth it to me.

  59. chrisjames says:

    @NoWin: The mechanics of the situation applied years ago just as much as it did today. Even if there was and is no way out, there’s no reason to let things go this long without a peep, then start ranting and raving when you get backed into a corner.

    Still, I don’t agree that there was no way out. There was plenty of time for merchants, probably through an entity like the National Retail Federation, to negotiate with the credit card companies for fairer practices. Not to mention they are actively seeking an alternative now, an alternative that was never an impossibility. The fact that this idea is only now gaining force implies that they’ve been letting things slide this long and they’re now paying for that decision. The markup trick doesn’t work anymore, at least not with gas.

    I won’t sympathize with a group of people that never bothered to question this because they can just let the consumers pick up the costs. The consumers, you know, the ones getting the shaft from the start. It’s a terrible practice on the part of the credit companies, but these merchants had the ability to effect a change all along. It’s too late for sympathy.

  60. NoWin says:

    @Snarkysnake: I think the basic diff between Discover and the V/MC line is simple branding. Visa and MC brand their name “out” to the banks (and us) to use “their network” for processing (Visa/MC not being card companies, but the processor of the transaction request). Discover is a card company and network in itself, so they risk more than being just the company the “faciltates” the card info between merch and you bank.

    Think of Visa/MC as a commerce-processing version of Paypal (bad analogy, but I think you get the point)

  61. sventurata says:

    @johnfrombrooklyn See Mac-phisto’s explanation: certain types of transaction (SecureCode, Verified by Visa, “No Signature Required”) are charge-back proof. Unless you were trying to chargeback multiple gas authorizations or fast-food purchases, different scenario.

  62. A.W.E.S.O.M.-O says:

    @johnfrombrooklyn: It’s true that a merchant may have to absorb losses due to any fraudulent card-not-present transaction, but otherwise, I can’t imagine it’s that hard to dispute a chargeback. Just produce the physical delivery signature. Case closed.

  63. emington says:

    hum here we don’t have to prepay for petrol (yet) [and i don’t understand why you’re complaining about such a cheap gas price ;)] so it’s “pump gas, walk into station, pay, leave”

  64. mac-phisto says:

    @emington: well, here, americans steal gas whenever possible (b/c we all carry guns & if we can’t have free gas, we’ll take it, dammit!)

    seriously though, in some states, courts have ruled that allowing a patron to dispense fuel before paying constitutes aiding their theft. ergo, everyone prepays now.

  65. theblackdog says:

    @boomerang86: That’s how Costco typically does it, unless you use an AmEx.

  66. mac-phisto says:

    @johnfrombrooklyn: no, i don’t work for VISA/MC. guess what? i work for a card issuer. i see more fraudulent transactions in an hour than you see in a year, so i’m pretty sure i know the rules.

  67. ianmac47 says:

    Maybe people should buy less gas.

  68. hellinmyeyes says:

    I fail to see what the big deal is and why gas companies are selling gasoline at a loss. This sounds a lot like airlines bitching about how they have to cut peanuts and sodas/water from flights because fuel prices have gone up. HELLO?! Put your profit margin in, adjust for your new, higher costs, and sell it at the higher price. Yes, people will bitch, but there’s no sense in whining about probably the second most fundamental concept of business.

  69. Saboth says:


    You want me to carry around $100 in cash for gas, AND wait in line for 10 minutes behind all the mouthbreathers that are buying beer, lottery tickets and cigarettes? I don’t think so.

  70. mdoublej says:

    Anyone else uncomfortable with the power the credit card companies are gaining? As credit/debit cards become “money”, these types of stories will become more common. When I spend cash, the government doesn’t get a cut for printing the money (other than taxes of course, but those are supposed to go to running the government, not make it rich). Judging by the posters on here who would refuse to use cash-only business like gas stations, they are sure to be a dying breed, which will give the CC companies even more power.

  71. jblaze1 says:

    My uncle owned a gas station that recently went bankrupt, partly because of the fees he had to keep paying to credit card companies. His station brand wouldn’t allow the discount either.

  72. AustinTXProgrammer says:

    @coan_net: I use my card twice in those situations as well. It doesn’t hurt them that much, because the bulk of the fee is based on a percentage as opposed to fixed rate. If you are doing debit pin transactions then you are causing them a slight loss.

    Gas stations used to have separate cash and credit prices. The credit card issuers banned that practice, and until merchants revolt they won’t relax.

    More power to this guy, but I’m going to drive to the next station.

    I get 3% back on gas purchases with my Chase Freedom card. I pay it off in full. If merchants offer a 5% cash discount I’ll take it, if its a 3% discount, I’ll just get it from the bank later (not to mention $200 of rewards can be redeemed for a $250 check).

  73. anatak says:

    As you’ve described, the ulterior motive here is to get people into the store to buy stuff that they actually make money on.

  74. anatak says:

    Oh! and Cash is King, FTW

    Less convenient here? Sure
    Are you really in that big of a hurry? No. Otherwise, swipe the card and pay for the convenience.

  75. Lambasted says:

    @RayDelMundo: “Not true. This is a full service gas station, not a convenience store. This guy makes way more on repairs than he does on gas.
    There are virtually no full service gas stations around here anymore. 99.9% of the places that sell gas are convenience stores. I live a couple of miles from this guy’s station.”

    I am not sure where you live but if that is the only full service gas station for miles around that is a shame. Vast majority of gas stations where I live are full service. I suppose the benefits of living in a heavily populated metropolitan area. Plenty of cars need servicing creating a heavy demand for full service stations.

    However, none of this has anything to do with the issue at hand, which is paying cash for gas. Regardless of how much of his business comes from repairs, he will still lose business from non-cash carrying gas customers who will drive to the nearest convenience store gas station that accepts plastic.

  76. Southern says:

    I dunno.. If I had the choice of paying $3.90 at one station for gas with CASH and $4.00 at the other station with PLASTIC, I’d probably go to the bank and take out the cash.. With a 20 gallon tank that’s (up to) a $2.00 savings.

    Hell, I already pretty much do that at Wally World, I’ll put $150 or so on a GiftCard and just use that at the pump because they usually have the cheapest price around anyway, and the Gift Card saves me ANOTHER 3¢ per gallon. if they expanded it so that using a GC or Cash saved me 10¢ a gallon, I’d be all over that.

    So if the guy that doesn’t want to accept credit cards made sure his price was at least 5¢ a gallon less than anywhere else, I bet he’d get more business than he could handle, even as a cash only business.

  77. sashazur says:

    Just take care when paying with big bills if you pay cash – the other day an attendant pulled a scam on me insisting I had given him a $20 bill when in fact I had given him something bigger. No way to prove it and I was in a hurry. The moral of the story is, never hand over anything bigger than a $20 without making sure the attendant or cashier confirms the denomination before taking it.

  78. Catch-22. Damned if ya do, damned if ya don’t. Good reason to never base profits on a flat fee amount, ’cause eventually the %’s always catch up.

  79. azntg says:

    @sashazur: General point in life. I know that sometimes it’s unavoidable, but otherwise, NEVER do things in a hurry.

    If I was in your situation and I had some time, I’d ask the police for their opinion.

    Mr. Randolph’s point (from the original article) is moot in my case. Yes, I pay by credit card. But after the price of gas hit $3, I simply stopped filling my gas tank in full. Maybe to halfway at most. So, assuming that the cost of interchange hasn’t skyrocketed within the last 5 years, you’re still paying a similar amount for serving me gas this year when compared to about 5 years ago.

    Of course, this is practical for me because I usually drive only in the city (to places where it is very inconvenient to access by mass transit) or otherwise, one or two counties away from the city itself.

    And I usually know where I’m driving and how much gas it’ll take me to get there, so I usually don’t run the risk of running out of fuel.

    Also, I do find it disturbing that the card networks are collecting so much in interchange here in the states. Of course, for convenience, nothing is free. I’d expect some degree of compensation for the convenience (in the form of interchange and perhaps some loss in anonymity).

    But at the same time, I cannot completely acquit the merchants of blame in this issue. See, some of them have been accepting credit cards since when the credit card industry was making roots. They had ALL THAT TIME to complain/revolt/what have you to ask for lower interchange or to ask to pass the interchange directly to us, the customers (as opposed to incorporating it into the sale price uniformly). They did not and they folded relatively quickly when the card companies made their decision / “mandate.” So, some blame goes to them for not keeping them in check.

    The consumer, on the other hand, had very little to complain until recently. It is a relatively recent development of the shady billing practices, business practices, etc. Before that, everything was relatively straightforward and we got perks for using the cards. So I feel compelled to acquit the consumers more than I would to the merchants to the issue at hand today.

  80. oldskool71 says:

    @BrookeCossus: You are very right. Most Americans just let shit happen until it affects them – now its too late. It’s no coincidence that Bush and his friends are oilmen and that prices have been steadily going up since he took office. George Bush is laughing all the way to the bank. This latest increase in gas is his parting gift to himself. All you people that voted for this crook are just as guilty. It also seems funny that Consumerist readers would be so foolish to pay for gas with a credit card that they will then pay interest on.

  81. Southern says:

    Kinda reminds me of eBay.. A few months ago they reduced their LISTING fees (which were fairly cheap to begin with), but INCREASED their final sales % fee.. So while you might save 25¢ from listing your item, you could wind up paying $2.00, $5.00, $20.00 (etc.) MORE in the final sales fee, depending on the final selling price of the item.

    And they of course tried to gloss that over. Bah. :)

  82. Southern says:

    I simply stopped filling my gas tank in full. Maybe to halfway at most.

    Be careful with that — you really don’t want your gas tank to fall below 1/4 tank or so, as the position of the fuel pump (which is on the inside of the tank of most cars/trucks these days) is such that at around a quarter of a tank, the level of the fuel inside the tank falls below the fuel pump, which causes it to heat up and really shortens its life span. Above 1/4 tank and the pump is submerged in the fuel, which keeps it cooler.

    You’d be better off just filling up once, then when you get down to half a tank, filling back up; you’re still putting in the same amount of gas as you would from putting in a half tank from “Empty”, and your fuel pump will last a lot longer.

  83. veronykah says:

    @Steaming Pile:They have that here in California at Arco stations.
    Not sure why other gas stations don’t do what ARCO does…you can pay cash outside by inserting bills into a machine OR pay with a debit card and get assessed a 45¢ “fee” for using your card.
    I totally do not agree with the debit card fee, but for station owner in the story it seems like it would solve his problem.
    @sashazur: That is one thing I have ALWAYS been paranoid about happening. Its not as if they give you an receipt when you bring cash inside to prepay for your gas. How do I make sure some unscrupulous cashier doesn’t decide to make off with half my cash?

  84. JoeVet says:

    I don’t carry cash….I carry plastic. If you don’t cater to that I don’t buy from you. Its a simple choice on everyone’s part.

  85. Ben Popken says:

    Chris writes:

    “My in-laws own and self-operate a Citgo gas/service station: they are lucky if they can mark-up their gasoline by $0.05 cents. If they sell an average of 500 to 1,000 gallons per day, you do the math on how much “money” they make by selling gasoline. Add to this the cost of credit card fees, and they break-even on gasoline, and sometimes LOSE money on every gallon.

    I do not recall a time when they were ever in a situation to mark-up their gasoline by $0.10 to $0.12 cents per gallon.”

  86. tgpt says:

    There seem to be plenty of people willing to pay cash/debit at the Arco station down the street from me (for those of you who haven’t seen it mentioned before, Arco doesn’t take credit cards at their stations.)

    Sure they lose some business, but it’s better to have a small part of a profitable market than a big part of an unprofitable one.

  87. trujunglist says:

    I know a guy in Escondido that runs a gas station. He says he’s making about 1-2 cents per gallon. 1-2 cents! Take the transaction fee for a credit card and he’s out the entire profit from the gas. Makes sense to me, everyone’s gotta eat and it certainly won’t help the economy if smaller stations everywhere suddenly go belly up.

  88. Lucky225 says:

    Again, read the damn merchant agreement, it’s a contract, don’t sign it if you DON’T agree with it. This could co$t you even more then the stupid fees if you refuse to accept the card when you have a merchant agreement that binds you to accept them.

  89. emington says:

    @ mac-phisto:

    You Americans don’t seem to trust each other o_O… But I don’t understand the motivation to steal petrol if one is able to… can anyone explain this? Is it a part of the American attitudes or psyche?

  90. Rectilinear Propagation says:

    @anatak: It’s not just about speed. There are protections when your card gets stolen but the $100 you had in cash is just gone.

    Not to mention just pulling out that kind of money makes you a target.

  91. austinchu says:

    Interesting. I never really saw it as a problem. I guess people are freaking out. I’m not worried about gas prices. I wish it will hit $10/gal. I was listening to NPR this morning, and they said that Americans are driving 1.8% less than last year, and the numbers are expected to drop. I converted my car to run of waste vegetable oil and I haven’t paid for fuel since Jan. The higher gas prices go, the more money I save. It’s sick, I know, and I love it. Check out my pimp ride at

  92. emington says:

    also to add to my previous questions, why do you all seem to only pay by credit card? ._. it seems financially risky.

  93. mac-phisto says:

    @emington: first of all, it’s not that we don’t trust each other – we just like guns. a lot. second, taking something that isn’t ours is the very foundation of this great nation.

    seriously though, fuel is a major part of every household’s expenses & we’ve seen that cost double in the past 18 months. & quite frankly, there’s a lot of us that can’t afford it, but require it. real wages for the average american have been stagnant for the last 30 years. some say they’ve been stagnant even longer.

    in america, gas is akin to food, clothing & shelter b/c it is the means with which we obtain those necessities. public transportation in all but the largest (or more progressive smaller) cities is virtually nonexistent. & development trends in the 70’s, 80’s & 90’s spread services all over the countryside.

    so, in short, expensive gas is turning the entire country on its head. it’s exposing the truth for what it is – our standard of living is slipping away. & when people only have money for gas or food, they’re going to buy one & steal the other. it’s just a question of which is the easier target.

  94. Eoghann says:

    The only obvious solution to this is to have a government takeover of the credit card industry, nationalized credit cards. That will happen immediately after taxing the windfall profits of the credit card companies.

    There ya go. Problem fixed. Quit yer bitchin’.

  95. christoj879 says:

    @oldskool71: Hrm? Interest? Never heard of it. Rewards on the other hand, to the tune of 3-10%, that’s another story.

  96. ClevelandCub says:

    Great solution. Just don’t let Uncle Sam find out you’ve been driving on his roads with fuel that you have not been paying taxes on – it’s a major no-no and a federal crime. The fine is worse than the cost of the fuel. Unfortuate, but true.

  97. seamer says:

    @mac-phisto: I think you’re forgetting that with credit cards, the credit company makes money off both the customer and the merchant. It isn’t unreasonable to expect merchants to not be charged in facilitating a credit purchase, when most CC companies rake up to 29% APR on the average user.

    In other industries, this would be classified as double dipping and probably be illegal.

  98. azntg says:

    @Southern: Thanks for the warning.

    I keep my fuel level between halfway and a quarterway at all times (except when travelling long distances, in which case I keep the tank full). I don’t actually let the fuel level fall below the quarter mark.

  99. quaintly says:

    Just wanna add my two cents here that in smaller towns, gas station businesses are based almost entirely on store sales as gas stations get only 3-4 cents on each gallon and not the 11-12 cents/gallon as presented in the article.