Is This $0.10 Credit/Debit Surcharge On Gasoline Allowed?

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]


Edit Your Comment

  1. hills says:

    Brian, you were RIGHT to think this was fishy.

    Yes – the gas station definitely got it backwards – showing the high price, and then offering the discount for cash is the way to go.

  2. acknight says:

    write ==> right, below the first block quote.

  3. Askiba says:

    I’ve noticed this more then once in my town. Suffice it to say, we try not to buy gas at these places and have reported them. At least one sign went down, I believe.

    But seriously, why do merchants even THINK it would be a good decision to make gas cost MORE!? “Oh hey, gas is high priced, let’s capitalize on this and make people hate us more!”. Greedy, greedy merchants.

  4. PipeRifle says:

    It seems like that is a professionally-made little banner there too, demanding the extra 10 cents. Someone is probably doing a fair bit of business on those.

  5. AlteredBeast (blaming the OP one article at a time.) says:

    This stuff, combined with funds being put on hold that are far above what I can fit in my gas tank, has made me stick to keeping cash in my pocket just for gas.

  6. AMetamorphosis says:

    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.

    The sign on this pump would be considered illegal and should read: Discount of ___ cents per gallon for cash purchase.

  7. sleze69 says:

    I think the credit card policies aren’t very clear. They basically mean that the credit card price HAS to match the price posted on the sign and on the pump. Cash discounts are then DEDUCTED from the total price.

    Perhaps if they included english translations of their legalese, gas stations would be more compliant.

  8. opposablethumb says:

    If a retailer is violating its credit card agreement and trying to extract cash from its customers, I’d be very suspicious that they’re not reporting all of that cash to the IRS.

  9. qwickone says:

    Can they do a chargeback for the $0.10 per gal? So if they got 15 gal, can they charge back $1.50?

  10. smirkette says:

    Geez, it seems like everything is set by the oil companies…price per gallon, credit card fees… Funny how they keep saying they have no control.

  11. Average_Joe says:

    If a gas station is seriously called out on this, I would assume all they are going to do is append “with cash discount” to their sign or pumps. They most likely are not going to advertise the higher credit card price. It will be the same as advertising a cheaper price on the sign with the words, “with carwash” next to it. I’ve seen gas stations that only advertise the with carwash price because they have two spaces on their sign, one for diesel and one for regular gas. So they put that cheaper carwash price on the sign to attract customers.

  12. @SF_iris: Actually since most stations are franchised, they don’t. I’ve seen the same brand have same price or different price, but at differently owned stations.

    IIRC, they can show a sign w/ two prices, one over the other on top of the pump/dispensor and on the street sign, have to say weither the price is cash or credit.

  13. BigPapaCherry says:

    @Askiba: They’re not trying to make more money. In fact, the gas station owners are just trying to make any money whatsoever. With gas prices exceeding $4, the 2% credit processing fee is taking away almost all of the 10 cents per gallon markup that they would make. A 10 cent increase for a credit purchase, while against the contract, is the owner’s way to make back the money he’d lose to processing fees.

    The owner just needs to do cash discounts so he can make a living without breaching his contract.

  14. ThinkerTDM says:

    @SF_iris: The funny part is how people believe them.
    Anyways, as long as the people sit and take it in the ass, nothing is going to get done.

  15. PackerX says:

    The problem is that if those gas stations don’t charge more for credit card transactions, they can actually end up LOSING money on every gallon of gas sold once the credit card companies fees are deducted.

    I have a hard time believing that the oil companies set the cost of accepting credit cards at gas stations. Shouldn’t that all be part of the same merchant agreements?

  16. battra92 says:

    Someone I know worked at a gas station and he told me that it’s not so much the credit cards they hate, it’s pay at the pump. Getting you to come inside means that despite using a credit card (where they end up making practically nothing in the end) you might pick up a fountain drink or a bag of Fritos and there they make their money.

  17. BlondeGrlz says:

    @sleze69: Our gas stations have started posting both cash and credit prices on their signs – where they used to show regular and premium. I’m assuming it’s to get around these rules, but if you’re not looking closely you just assume the first price is for regular. One gas station was charging 16 cents less for cash, but also giving the discount if you used their branded credit card.

  18. dweebster says:

    A local fuel station nabbed me with this scam – Big sign with a price, but later looking at the bill they charged extra because I used a CC. … time to look into a chargeback.

  19. krom says:

    Every single ARCO station in Washington I’ve seen does this. The convenience fee is programmed into their payment kiosks, so that after you swipe your card, it asks you to confirm the fee. It’s usually 45 cents these days. For my 13 gallon tank that comes to nearly 4 additional cents per gallon which often decimates the narrow-margin price difference with other stations.

    Some stations’ kiosks accept bills, but others don’t; either way they tack on the fee. Of course, there is always a way to pay with cash. But the advertised price is the cash price.

    I know of one particularly egregious ARCO where the signs say “CASH PRICE” and the price magically goes up if you use credit/debit.

    I’ve been to probably half a dozen different ARCOs at least across this state, and they all either charge a convenience fee or advertise a cash price that is different than the card price.

    And ARCOs always seem busier than nearby stations. Gee.

  20. mgy says:

    @battra92: That’s why I heard Missouri has the lowest prices in the nation. EVERY gas station here is a convenience store too. Since all of the stations are making money on snacks, etc., they can sell gas closer to wholesale. Friends of mine from other parts of the nation are always surprised to see my reaction when I can’t get a soda at a gas station when we’re traveling.

  21. Jesse says:

    There’s a station that covertly does this in my area. Their sign price is the cash price and it’s labeled as such.

  22. jeffjohnvol says:

    go buy 5 dollars worth of gas, but pay in pennies.

  23. 8pozzum says:

    This also may be against your states Weights & Measures Law. Where it may take the credit card companies a few days or weeks to notify the owner of the agreement violation, your local W&M office will usually handle the complaint within 24 hours. In the picture associated with this article, the W&M approval sticker is located to the left of the “This Sale $” display. There is a phone number on the sticker you can call for clarification, and to report a complaint.

    In my home state this practice is in violation of 2 W&M laws: Charging more than the advertised price (cash discounts are legal), and not displaying the correct price prior to dispensing.

  24. Gideon says:

    My family has built and operated gas stations since I was a kid, so let me explain a bit of this. Aside from the formality of the credit card thing, this is how most gas stations do business:

    When gas prices go up, in order to stay competititve (especially with big companies who can manipulate their prices quickly and get a better price from the gas wholesalers), most gas stations don’t make any money at ALL on a gallon of gas. None. Maybe, maybe, something like a half cent a gallon. Almost everything comes out of inside sales.

    So, yes, as another poster said, “pay at the pump” is a problem in this sense. Also, when gas prices do go up as high as they are even people who come in are less likely to spend money.

    Keep in mind that most gas stations that aren’t a QuickTrip or what-have-you are family owned and absolutely dependent on this income.

    Luckily, we’re out of the “running” business. Thank god.

  25. slowinthefastlane says:

    ARCO doesn’t take credit cards – at least not in northern CA. They do take ATM cards (with PIN) with a $0.45 surcharge. They have worked this way for the last 10 years, at least.

  26. That-Dude says:

    @Askiba: I think its pretty much settled now that gas station franchisees aren’t very profitable and with the increased prices of oil, these merchants are in worse position than even the consumers. Oil companies make money but they dont own many gas stations. So a franchisee has to pay for the high gas with little offset and then hope that people do not curb their driving appetite, which apparently is happening to some degree.

    So, in other words, its not necessarily merchant greed — its bad advertising and ignorance. Cash discount and CC surcharge is a battle of semantics.

  27. Greeper says:

    @SF_iris: The oil company has zero to do with this. It’s a dealer. And doing that very likely violates the dealer’s agreement with the oil company.

  28. Jean-Baptiste Emanuel Zorg says:

    Well, aside from the already discussed Visa and MC rules forbidding surcharges (but allowing cash discounts) there is also the issue of actual legality. It varies by state, but in NJ, if there is a difference in price BOTH prices must be clearly displayed not only on every single pump, but also on all of their advertisments and signs.


  29. theblackdog says:

    Thank god Costco can’t do this…they just don’t take cash, period.

    Still, I’m going to be keeping my eye out for other stations trying to pull this scam.

  30. Parting says:

    Cash discount or credit surcharge. Different names, SAME result.

  31. james says:

    They have been doing “cash discounts” for years at gas stations. Usually it is a 5 or 10% discount. They like to then post the cash rate in huge numbers and the credit rate a bit smaller. A bit shady maybe, but the real issue is again with the fee structure CC companies. I don’t think I’d call this a scam exactly.

  32. Convenience fees are allowable if paying through a 3rd party processing company. Such transactions must be disclosed and are usually done so on that nice vinyl display sticker listing all the CC brands. I see no such 3rd Party transaction listed.

    Sorry. Convenience Fee not allowed.

    The store is also trying to play a game with the “non-cash” transaction loop-hole in CC rules. Getting into a weird grey area here. There is a loophole for “non-cash” transactions, but that generally means ALL “non-cash” transactions, such as traveler’s checks, money orders, purchase orders as well as CC’s and may also include personal checks. Like I said, this is a real goofy grey area, one that the typical gas station has ZERO chance of meeting all of the specific requirements.

  33. zarex42 says:

    The credit card companies are totally in the wrong, here. They charge extra for the use of their cards, but prohibit the merchant from passing those costs along. Totally ridiculous. The cash discounts are a good start, but why shouldn’t they be able to say, “It costs us an extra $.30 to charge your card, so we’re tacking on $0.30”?

  34. rb1971 - E39M5'er says:

    I had the exact same thing happen in downtown SF last weekend – except instead of $.10 the differential was $.20, and so instead of paying $4.89 for gas I paid $5.09. Which is the most I’ve ever paid, I think. (Thankfully I only drive about 2500 miles per year.)

  35. FF_Mac says:

    Why is everyone up in arms about this like it’s something new? As recently as 1998 (the last year I worked at one), gas stations ROUTINELY charged more for credit transactions. The price on the big sign was the cash price. The pumps had two different prices displayed on the dispenser; one for cash, one for credit…for each grade.

    It’s merely semantics as to whether its a cash discount or a credit surcharge. While some may throw a fit one way or the other, most don’t give a hoot. It’s more expensive anyway.

    Besides, the retailers make so little on the fuel, why should they take a loss on selling it?

  36. SBR249 says:

    @zarex42: It’s called economics and the price of doing business.

    Most people don’t carry gobs of cash around with them. ($2000 for a plasma TV in cash?) That means without credit cards, there would be less impulse buying of large things because buying them would be a hassle. This leads to stores making less money. Credit cards provide the convenience of being able to take out a short term loan (1 month) so you don’t have to carry around money sacks. Thus, if a store takes credit cards, theoretically, it will get more customers and more sales. In return, credit card companies charge a fixed percentage of each sale not only for making that loan available but also for providing the convenience and allowing stores to attract customers.

    If, on the other hand, credit card companies do as you say, and consumers have to pick up the tab, then customers will likely think twice about using plastic ($2000 plasma TV becomes $2040) and this will hurt sales. That’s why stores don’t pass on the cost. Additionally, if customers have to foot the cost, they won’t use credit cards as much if at all. Then, companies like Visa, MC, Amex, and Discover won’t make as much money and probably won’t be able to survive. So their policy is their way of staying afloat.

  37. Dave on bass says:

    When I was a kid (call it 20-25 years ago) all the gas stations around southern MD seemed to have both a cash and a credit price posted – and yet another price for full-service pumps. So I can’t say I’m surprised, but I (ignorantly) would have never just randomly assumed this little custom would come back.

  38. There are a couple AM/PMs around me that charge 45 cents for credit or debit and don’t offer discounts (that I remember). I thought this was shady, so I’ll definitely report them.

  39. mknoll1 says:

    Why does anyone care whether it is a cash discount or a credit card surcharge. They are the EXACT same thing. If the airlines announced a discount for not checking bags of $15/bag then at the same time raised their prices $30 the effect is identical and yet everyone here would be cooing about how great it is that you get money back on your trip for not checking a bag. And yet, these same people freak the F out over a charge that adds up to the same exact bottom line. If half the energy wasted over this stupid distinction was put to productive use we would probably have plug in hybrid hover cars by now.

  40. linbey says:

    Why are gas stations NOT allowed to charge a surcharge for credit but they ARE allowed to give a cash discount. It’s quite obvious to me at least that it is the exact SAME thing but just worded different. If Credit Card agreements dont allow for surcharges, they shouldnt allow cash discounts. Either way, the merchant is passing his service fees to the customer.

  41. Hockeypuck says:

    Several gas stations around here have started putting on their signs:

    Unleaded Cash
    Unleaded Credit (usually cash + 10 cents)

  42. drjayphd says:

    @linbey: Because credit surcharges lead to false advertising. If you advertise the cash price, someone pulls in, and sees that they’ll be charged more for using a credit card, people will be pissed. Not so much if you advertise the higher credit price and offer a cash discount. Same thing, just a question of semantics and psychology.

    Although I still won’t patronize a station that does this if it’s not an absolute emergency… kinda funny that the Hess station down the road from the office charges the same amount as nearby stations if you pay cash

  43. digitalgimpus says:

    @linbey: CC companies don’t want it to be known that credit cards increase product prices. That’s why the rule exists. In reality, all prices in stores account for CC processing fees (if you pay cash, that’s just extra profit), but they don’t want the uneducated consumer to know about processing fees. Merchants can’t even disclose what they pay, much less offer a surcharge.

    The cash discount is really a great way to save some cash. $0.10 a gallon can really ad up. Only 10G for $1. I’ll take that discount… if you don’t want yours, don’t make the rest of us pay for it.

    In reality the problem is CC companies take way to much of a cut. They make billions, and then fine customers, charge annual fees etc. for even more profit.

    Gas stations today are lucky to break even. Even Exxon can’t figure out how to make stations profitable. That’s why they are exiting the business of owning stations.

  44. bbagdan says:

    I would buy a chocolate milk and smash it on the countertop just to prove a point.

  45. I think the prevailing market price should be used to judge whether they’re cash discount or credit surcharge–Examples using premium prices in my area since that’s what I buy:

    Other nearby affordable stations whose prices are for any method of payment: $4.66
    Station In Question: $4.66 cash, $4.71 credit/debit
    Chevron or Shell stations nearby (read: insane high price places): $4.71

    Station In Question does not offer a cash discount, they offer a credit surcharge.

    This is a real example and it pisses me off the way they switched over to this method, too–the big 25′ price sign has a little hangy-sign attached to the bottom of it now, “CASH DISCOUNT PRICE.” A lil’ 4′ sign sits on the ground underneath it with the “CREDIT PRICE”

    Sidenote, in the OP’s pic they have 93 octane?!?! I want some of that! (Here premium is 91).

  46. Ilikenumbers says:

    “Then, companies like Visa, MC, Amex, and Discover won’t make as much money and probably won’t be able to survive.”

    Laugh of the year.

    Seriously though, the loss of business through merchant fees which are on the order of 2-3% per sale, plus the monthly/annual fees associated with the processor, it would hurt their bottom line, but their racket is consumer credit/lending. See, they get theirs both ways, 2%+ from the merchant and 8-30% from the customer (in the form of monthly interest on revolving balances).

    I wouldn’t worry about their solvency/cash flow picture any time soon.

  47. Surcharge or no surcharge, this gas station is charging 50 cents less per gallon than I am paying here in SoCal. Where is this mysterious mythical land of sub-$4 per-gallon gas?

    Back to the topic: Arco stations in my area are usually the cheapest, but only if you carry cash. Around here, they have a 35 cent fee (could be 45 cents now for all I know) for using a credit/debit card. That usually kills it for me since my car has a small tank and the fee pushes it up to a price-per-gallon about equal to the Chevrons, Shells, and Exxons. Valero is new one in this region and offered a lower price similar to Arco, but they now charge more for credit transactions as well, so they and Arco see none of my business.

    Don’t like the fees or additional charges? Vote with your wallet. Have a favorite gas station? Donate to their cause and buy a hot dog and soda from them once in a while.

  48. battra92 says:

    @mgy: Here in Western MA gas stations are more cigarette shops and Lottery kiosks than gas pumps. Plus there’s Cumby’s with their giant sized soda/Icees that everyone gets.

  49. TreyWaters says:

    @SBR249: “That’s why stores don’t pass on the cost.”

    What makes you think they aren’t passing on the cost? The stores know that the majority of the transactions will be CC transactions, so the cost to the store is already built into the cost of the goods. Of course, this is talking about typical retail outlets as given in your example.

    As far as the “cash discount” vs “credit surcharge” being identical people – look at it this way: It’s similar to rebate pricing. Would you be happy going to the store expecting to pay the advertised price, only to find out that the advertised price is, say, an after-rebate price? No, not exactly the same thing, but same principle – the advertised price is only what you pay given certain stipulations (in this case, after you file the rebate).

    Same thing here. You see the advertised price for gas, and pull in expecting to pay that price, only to find out that’s not REALLY the price you’re going to pay.

    Don’t get me wrong. I’m not saying gas station should lose money, but I’m siding with the CC companies that the advertised price should be the honored price, with discounts given to those who use preferred payment methods.

  50. Ragman says:

    @West Coast Secessionist: 93 octane is standard off of interstates in urban areas from what I’ve seen in Texas and Louisiana. They run 87-89-93. Get a few miles away from urban/interstate, it drops to 86-88-91, at the same or higher price. There are the occasional “super” pumps that do 86-87-88-89-91-93 + diesel that I’ve seen in Dallas.

  51. Julia789 says:

    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.”

  52. Ben Popken says:

    @acknight: @hillsrovey: Don’t forget your Consumerist Comments Code:

    “Send your copyedits to the top
    The quickest way to get grammar, spelling, or punctuation errors fixed is to email the author and/or site editor directly.”

  53. kyle4 says:

    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.

  54. HeartBurnKid, creepy morbid freak says:

    @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.

  55. redkamel says:

    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.

  56. AustinTXProgrammer says:

    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).

  57. crazylady says:

    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

  58. bwcbwc says:

    @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.

  59. fkafl says:

    “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.

  60. Ragman says:

    @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.

  61. zarex42 says:


    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.

  62. PackerX says:

    @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.