Gas stations charging more if you use credit

05-24-2008, 01:21 PM

I'm curious if this is happening everywhere. Yesterday my wife and I pulled up to a gas station to get gas before we headed out on the road for a 4 day vacation in West Michigan. The price listed on the sign said $3.98/gallon. I pulled out my credit card, and then noticed that on the pump it said "$4.03/gallon".

Confused I went into the station and asked "Is it $3.98 or $4.03? He responded "$3.98 for cash purchases."

Now... In past businesses I have signed up to accept credit cards. In every single agreement that I signed, it specifically stated that I COULD NOT OFFER discounts for people who paid with cash. How are these gas stations getting away with this? Are the credit cards companies aware they are doing this? Has anyone else run into this? I find it completely ridiculous!

djs · 05-24-2008, 01:41 PM

There is actually an old federal law that makes it illegal to charge more for using credit. Same law makes it legal to give a discount for paying with cash.

Credit card companies don't want you to offer a discount for cash, so they can state this in their agreement. My guess is, gas stations do enough volume they can negotiate terms a bit.

Back in the 80's, for a while, it was commonplace for stations to offer a discount for cash. That seemed to have gone away, but maybe it's making a comeback.

Dan

TXINSURANCE · 05-24-2008, 02:07 PM

They can not charge more for credit card, but they can charge less for cash / debit. The liquor stores in Houston give 5% off for cash or debit.

The biggest joke with gas at or over $4 per gallon is the price is still in 9/10 of a cent - what a joke! $3.99 and 9/10 of a cent.

What is 1/10th of a cent? Some things never change.

Diesel I just saw at $4.80 today.

SportsNut · 05-25-2008, 08:22 AM

Originally Posted by TXINSURANCE

They can not charge more for credit card, but they can charge less for cash / debit. The liquor stores in Houston give 5% off for cash or debit.

The biggest joke with gas at or over $4 per gallon is the price is still in 9/10 of a cent - what a joke! $3.99 and 9/10 of a cent.

What is 1/10th of a cent? Some things never change.

Diesel I just saw at $4.80 today.

I would imagine that on the volume of gasoline that is sold in the US, the 9/10th of a cent that is still part fo the sale adds up to a whopping sum each day.

In fact, it appears that there is 400 mil gallons of gasoline sold each day, so that would put that figure at almost 4 mi / day in sales, just from the 9/10th left as part of the price...

No wonder why it has not left the pricing structure...

theinuranceguy · 05-27-2008, 11:29 PM

I have a couple of friends of mine who run/own gas stations, they do not charge extra for credit but they are barely making money on it. When someone uses their card they have to pay a fee ( a percent of the sale). With profits of $.04 per gallon that fee is cutting the profit sometimes in half...

Most gas stations survive off sales in the store.

TXINSURANCE · 05-28-2008, 12:51 AM

I have heard the mark up is more around 15 to 30 cents per gallon, 4 cents to me does not sound sustainable. I think there are also some numbers games with market pricing. The gas you are pumping in might have been bought at a much lower price than current pricing.

Who knows either way it is a rip off.

Who goes inside a gas station store these days? No thanks.

theinuranceguy · 05-28-2008, 01:56 AM

Originally Posted by TXINSURANCE

I have heard the mark up is more around 15 to 30 cents per gallon, 4 cents to me does not sound sustainable. I think there are also some numbers games with market pricing. The gas you are pumping in might have been bought at a much lower price than current pricing.

Who knows either way it is a rip off.

Who goes inside a gas station store these days? No thanks.

Gas station owners can buy futures, but on average the actual gas station is only making a couple cents per gallon. Most income comes from buy drinks and chips from inside...