We all know high gas prices are affecting every driver, business and segment of our country. Now, high gas prices have cut into gas station owners’ profits so much that some of them are eliminating the use of credit cards due to high fees.
The fees charged by credit card companies are based on a percentage of the total gas sale. So basically, when the price of gas goes up, the credit card fee goes up.
Usually, it’s a fixed percentage, about two percent, on every transaction. But every time a customer pays at the pump with their credit card, it’s costing the station money.
Being that most stations hardly make a profit on the gas at all, some are now banning credit cards and asking customers to use cash only. In some areas, it’s actually costing the station money every time someone pays at the pump.
The profit the station makes is usually made on food and drinks in the convenience store.
As gas rises above $4 a gallon, that pushes fees toward 10 cents a gallon, reports the Associated Press and Yahoo. Now stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits diminish or even reverse.
"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."
Lenard’s group reports convenience stores paid roughly $7.6 billion in credit card fees last year, while making $3.4 billion in profits.
Here’s why gas station owners are upset. They are paying more in credit card fees as gas goes up, but the cost of processing a credit or debit card transaction stays the same.
The credit card companies say that the use of credit cards at gas stations is a great convenience and helps bring in sales.
In a world of plastic money, some stations are offering a discount on the price of gas if customers use cash, about four to 10 cents a gallon, so the owners don’t have to pay the high credit card processing fee.
