Gasoline - credit card connection

[CCdaCE]

This article confirms what I've long thought to be true.

JS Online: Running on empty

Credit card companies and banks get an average of 2.75% on every gallon of gas sold, and credit card processing fees now rank as the second-biggest expense for gas station operators, according to the National Association of Convenience Stores.

"Even at $3.59, I was making 15 cents, but I was still giving 10 of those cents to MasterCard," he said.

So, you're still paying for the convenience. People think they're getting 5% back, but aren't they really paying 7.25% and getting refunded the 5%?

-CC

 

[Texas Proud]

First, I think you math might be a bit off... if they average 2.75% then how is it 7.25%?

But, let's use your number... here are my options...

The gas pump says $30... I can

Pay $30 in cash and the gas station makes more money

Pay$30 on a CC with no rebate and the bank makes more money

Pay $30 on a CC with a 5% rebate and I get back $1.50...

None of the options is to pay 7.25% less so the CC company doesn't get the money.. I will have to pay the $30 no matter what the fee...

 

[free4now]

What's annoying about all this is that electronic transactions (e.g. credit card, debit card) probably have a much lower overall handling cost than cash (which requires people to physically move it around from store to bank with high security). The only reason credit costs more is because the credit card companies have a monopoly on providing that service. But as long as there is the market inefficiency that keeps credit card transactions costing the same as cash at most gas stations, I'll keep taking advantage by using credit cards and getting my 1% cash back.

 

[UncleHoney]

Add another twist to the scam by the credit card people. Last week I filled up and the pump stopped by itself at $50. I looked at the readout and it said "Authorization Limit Reached". WTF?

Then I noticed a small sticker that said Visa had a $50 authorization limit on gas purchases and Mastercard had a $75 limit. If you wanted more gas you had to swipe your card again and start all over.

The little sticker also said it was credit card company policy not the stations. Looks like another was to get a few more cents in transaction fees.

 

[Sam]

Long time ago (10, 15 years?), you either get a discount for using cash or get a surcharge for using credit. Now everyone pays the surcharge! Can we really blame the CC companies? Or ourselves? We bought the product, we made it pervasive, we made it a necessity.

My question is how much the existence of CCs really cost the consumer? I'm thinking 2% for almost all purchases.

 

[OAG]

UncleHoney: What state was that in? My last purchase for my Guzzler was $52.40 on a VISA care in OH -- no problem (except that was ONLY 17 Gallons of Gas).

 

[OAG]

Sam: I can't figure that one out--if I pay $5 Cash or put $5 on the credit card my cost is still $5 (where did the surcharge get added on?).

 

[UncleHoney]

UncleHoney: What state was that in? My last purchase for my Guzzler was $52.40 on a VISA care in OH -- no problem (except that was ONLY 17 Gallons of Gas).

It was in Ohio too, Columbus. Maybe it's station specific, it was a Speedway station. I haven't heard of anyone else having this happen.

UH

 

[dex]

Long time ago (10, 15 years?), you either get a discount for using cash or get a surcharge for using credit. Now everyone pays the surcharge! Can we really blame the CC companies? Or ourselves? We bought the product, we made it pervasive, we made it a necessity.

My question is how much the existence of CCs really cost the consumer? I'm thinking 2% for almost all purchases.

It was probably more like 25 to 30 years ago that you were able to get discount for not using a credit card. The practiced was outlawed by our government. Do you think the credit card companies pushed for it

Yes - we the public are ultimately paying the credit card transactions cost or to put it another way - we are paying for the cc industry costs and profit.

I think most businesses factor in cc costs into their pricing structure.

Finally, studies have shown that people purchase more when they use cc rather than cash.

 

[retire@40]

Sam: I can't figure that one out--if I pay $5 Cash or put $5 on the credit card my cost is still $5 (where did the surcharge get added on?).

You are paying a built-in surcharge. There is a cost for the convenience of using a credit card that everyone pays at this point in almost all purchases.

Even cash has a cost associated with it. In order for you to use cash, you must pay taxes for the government to print your cash.

Nothing is free in this world.

 

[maddythebeagle]

It was probably more like 25 to 30 years ago that you were able to get discount for not using a credit card. The practiced was outlawed by our government. Do you think the credit card companies pushed for it

I dont think it is a law but rather in the merchant agreement with visa/mastercard, etc. that they cant give a discount on cash purchases.....

 

[TromboneAl]

I wanted to pay tuition by credit card so that I could get 1% back. But TuitionPay.com wanted a 3% surcharge. I told them that's not allowed, and reported them to the credit card company, but nothing came of it.

 

[Sam]

Sam: I can't figure that one out--if I pay $5 Cash or put $5 on the credit card my cost is still $5 (where did the surcharge get added on?).

R Wood, you're paying the surcharge either way. In other words, the retailer is already making the assumption that would be paying by credit card, and pricing the merchandise accordingly.

 

[Sam]

The practiced was outlawed by our government. Do you think the credit card companies pushed for it

Outlawed? Can you point me to that law?

If it were outlawed, I'd be able to pay for my car using the CC, TAl would be able to pay his daughter's tuition using the CC, etc...

 

[CybrMike]

Outlawed? Can you point me to that law?

If it were outlawed, I'd be able to pay for my car using the CC, TAl would be able to pay his daughter's tuition using the CC, etc...

I do believe it is in most folks mastercard/visa business agreement. Perhaps car dealerships and the like strike that from the agreement or choose to ignore it.

 

[dex]

Outlawed? Can you point me to that law?

If it were outlawed, I'd be able to pay for my car using the CC, TAl would be able to pay his daughter's tuition using the CC, etc...

I'll have to do some internet research.

Re: car and tuition - in order to get around the law the Car Dealer (seller not repair dept.) or University may not actually have a cc company relationship. The company that wanted the 3% might have been an intermediary that you paid and then they paid the university.

 

[dex]

Law info:
406. Can the merchant charge credit-card users more than cash customers for the same item?

http://www.oag.state.ny.us/lawyers/opinions/2006/formal/2006-F2.pdf

So, in my mind; if a company accepts credit cards they can not impose a fee. Also, in most circumstances, the company can not give a discount for paying cash.

 

[UncleHoney]

Law info:
406. Can the merchant charge credit-card users more than cash customers for the same item?

http://www.oag.state.ny.us/lawyers/opinions/2006/formal/2006-F2.pdf

So, in my mind; if a company accepts credit cards they can not impose a fee. Also, in most circumstances, the company can not give a discount for paying cash.

We just ordered some furniture and the options were
1 in-house financing
2 less 5% credit card
3 less 7% cash

Saved a bunch using good old green money.

 

[OAG]

Lots of Government entities will surcharge a payment by CC. Just try to pay your RE taxes by CC, IRS Taxes by CC, State Taxes by CC. So since as has been said everyone up-charges on the assumption your will be paying by CC aren't you getting a DISCOUNT when paying those entities via ACH, Check Debit or some other means EXCEPT CC?

 

[OAG]

We just ordered some furniture and the options were
1 in-house financing
2 less 5% credit card
3 less 7% cash

Saved a bunch using good old green money.

So Uncle Honey you have been over to Kittles again (just a guess). It took me about 10 minutes to read the big chart they have on all of the ways they will sell stuff this holiday weekend. I just wonder what the real cost is. By the way the cash price IS NOT the least they will accept as I got an item even cheaper last year after offering to cancel an order and buy it from some other firm.

 

[Sam]

Law info:
So, in my mind; if a company accepts credit cards they can not impose a fee. Also, in most circumstances, the company can not give a discount for paying cash.

There is no such law and you know it. You can go to any car dealer and make a deposit for a new car with your credit card. The car dealer JUST ACCEPTED CREDIT CARD. Now try to pay for the balance with the credit card. Either it can not be done or they will add a surcharge to it.

Two weeks ago I paid the $500 deposit for my son's dorm using the credit card. The balance will have to be cash or check, unless I want pay an additional 2% surcharge. Yet another example of a company accepting credit cards, but has two tier pricing. They have been around a couple decades and have thousand of customers. I'm sure they are not breaking the law.

 

[Texas Proud]

Outlawed? Can you point me to that law?

If it were outlawed, I'd be able to pay for my car using the CC, TAl would be able to pay his daughter's tuition using the CC, etc...

It matters what state you are in... in Texas a LONG time ago, it was illegal to give a cash discount... then, for some reason it was legal as the gas stations used to have a 'cash' and 'credit' rate.. now, that went away, but I dont' know if they changed the law back to no cash discount...

But, for schools and gvmt entities, they bill you the amount they expect to be paid without a surcharge... so they make you pay their surcharge if you want to pay by CC... I don't think it is illegal...

 

[SecondCor521]

The only reason credit costs more is because the credit card companies have a monopoly on providing that service.

There is no monopoly.

1. American Express
2. Mastercard
3. Visa
4. Discover

In most mature industries, there are usually only a few top companies that win the majority of the business. With the credit card industry being moderately mature, I think having four major players is actually less monopolistic than most.

2Cor521

 

[UncleHoney]

So Uncle Honey you have been over to Kittles again (just a guess). It took me about 10 minutes to read the big chart they have on all of the ways they will sell stuff this holiday weekend. I just wonder what the real cost is. By the way the cash price IS NOT the least they will accept as I got an item even cheaper last year after offering to cancel an order and buy it from some other firm.

We looked around Kittles but ended up buying from Grolls in Waldo. I always like going up there, especially stopping at the G & R Tavern for one of their fried bologna sandwiches. Makes spending the big bucks go a little easier.

G & R Tavern, Waldo, Ohio

 

[Basenji]

It matters what state you are in... in Texas a LONG time ago, it was illegal to give a cash discount... then, for some reason it was legal as the gas stations used to have a 'cash' and 'credit' rate.. now, that went away, but I dont' know if they changed the law back to no cash discount...

But, for schools and gvmt entities, they bill you the amount they expect to be paid without a surcharge... so they make you pay their surcharge if you want to pay by CC... I don't think it is illegal...

Howdy!
After lurking on these forums for a long time, I joined so that I could add a bit more to Texas Proud's helpful comment.
According to a relatively recent (Nov 2006) Texas Attorney General weekly column:

In Texas, a business cannot penalize consumers who pay for a good or service by using a credit card. Businesses that add a surcharge to those who pay by credit card might be violating provisions of the Texas Finance Code. Usually those fees can only be charged by government entities, such as for the payment of property or other taxes or other fees required by a government agency.

However, businesses in Texas can discount the regular retail price of an item for consumers who pay cash instead of using a credit card. ...
​

Source:
http://www.oag.state.tx.us/newspubs/weeklyag/2006/1106cc_faqs.pdf
or
http://www.oag.state.tx.us/newspubs/weeklyag/2006/1106cc_faqs.txt

or see Texas Finance Code §339.001, which can be found in several places, including on the Office of Consumer Credit Commissioner website:
Chapter 339.Miscellaneous Provisions Relating to Interest