It may come as a surprise to many, but the pain at the pump is being felt by gas station owners just as much as it is consumers. As more consumers use plastic to pay for ever rising gas prices, retailers are being hit hard by the cost of credit and debt card transactions because of the fees attached to them. “I think the perception of the public is gasoline retailers like us are turning huge profits, and that is not the case. And when you figure in fees we’re paying” for credit and debit cards, “it’s real difficult,” said Troy Calhoun, vice president of Transmountain Oil, which operates 11 Howdy’s convenience stores in El Paso and two in Las Cruces.

The profit margin on gasoline sales are now being eaten away by credit / debit card fees with many consumers now using credit for all their gasoline purchases. In fact, Calhoun said that Howdy’s is now losing money at its stores on fuel sales. “Transmountain paid $255,000 in credit and debit card fees in the first three months of this year, up 30% from the same period a year ago,” Calhoun said. “That’s tied to a 20 - 25% increase in credit card usage,” he said.

Ross Garrett, who owns a Chevron-branded gas station, said credit card fees are having a “devastating” effect on his business with credit cards fees reaching $65,000 so far this year. “For every $1 cash sale, I bring in $2 in credit sale. By the time I end up paying all the credit-card fees, I don’t have much left,” Garrett said. With inside sales not making up for the loss, his store is losing money.

Convenient stores, selling approximately 80% of the country’s gas, paid more than $1 billion in additional credit card fees since 2006 and have also seen profits drop by $1.4 billion in that same time period. Lenard, a spokesman for the National Association of Convenience Stores in the Washington, D.C., area, said, “The whole issue of rising credit-card fees” tied to increasing use of plastic for fuel purchases “is the biggest issue facing fuel retailers in years.” Credit-card fees average about 2.5% of the dollar amount of each purchase, Lenard said.

A growing number of stores are considering cash discounts but are concerned that customers may feel punished for using plastic. Many consumers would also require a discount of $.10 to make the switch from credit to cash.

Lower the cost of gasoline! See our gas reward credit cards.

Posted in News & Info

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.