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I guess it can get worse
Old 06-26-2008, 10:55 AM   #1
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I guess it can get worse

Cash!?!?!?! I have forgotten what that is exactly.

Gas purchases? Stations saying bring the green, not the plastic
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Old 06-26-2008, 11:12 AM   #2
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Lots of issues here...

- What will the impact be of having every customer come inside to line up to pay cash at the register? How many more employees will be needed to handle the added customer load? At what cost?

- Having to swipe a CC prior to pumping offers some level of insurance against drive off theft. Will drivers have to pay cash in advance? What will this do to the staffing needs/labor costs of the local Gas-N-Go?

- What's the added risk for handling substantially larger amounts of cash on a daily basis? Will much more cash on hand result in more financial losses from theft (both internal and external)?

My prediction is the CC companies and gas retailers will find some solution. I think at least one CC company has already agreed to place a maximum charge to the retailer on gas purchases to help with this problem.
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Old 06-26-2008, 11:26 AM   #3
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Either some bits of information are missing here or somebody gotta go back to school for math 101.

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In many instances the fee is relatively small, say 2% on the purchase amount. When gas was sold at $2.75 a gallon, a 20 gallon sale would cost the merchant a $1.10, about five and half cents per gallon. With gas selling at say, $4.05 a gallon, that same 20 gallon purchase costs the merchant over $4.00, running 8.1 cents per gallon.

Here's the problem: The typical gas station owner sees a markup of 11 or 12 cents per gallon; suck out over 8 cents per gallon to the credit card company and profits suddenly head down the drain.
First example: 20 gallons at $2.75 a gallon. CC fee 2% = $1.10. Gas station markup 12% - 2% credit card fee = $5.50 (or $0.275 a gallon).

Second example: 20 gallons at $4.05 a gallon. CC fee 2% = $1.62 (not $4.00 as mentioned in the article). Gas station markup 12% - 2% CC fee = $8.10 (or $0.405 a gallon).

So the CC makes more money AND the gas station makes more money...
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Old 06-26-2008, 11:28 AM   #4
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FIREDreamer, I think the problem is gas station markup is $0.12 per gallon, not 12%.
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Old 06-26-2008, 11:32 AM   #5
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FIREDreamer, I think the problem is gas station markup is $0.12 per gallon, not 12%.
Yep, you're right, shoulda have my coffee this morning. So the $4.00 number was wrong, but the 8 cents a gallon paid in CC fees was right.
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Old 06-26-2008, 01:32 PM   #6
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Lots of issues here...

- What will the impact be of having every customer come inside to line up to pay cash at the register? How many more employees will be needed to handle the added customer load? At what cost?
I think it might be an easily solved problem.

My local giant liquor store chain has a cash discount policy. I always forget to bring cash when I shop there (for seltzer water), but the counter folks are kind enough to point it out to me. The fix there is to use my handy-dandy combination checking/debit/ATM card as a debit card and enter my pin into the keypad.

At the point-of-sale it uses the same equipment as it would if I had specified my purchase as "credit". But how the transaction is routed from there makes the difference. Since it's outside of Visa/MC's system, the liquor store doesn't have to pay them a transaction fee.

I don't know how much the fee is for a debit, or who pays/receives it, but it must be good enough for the vendor that they consider it a cash purchase and give me the same discount as if I put some greenbacks on the counter.

Next time I make my monthly purchase of gasoline I will have to look and see if there is an option for ATM/debit. My memory says yes, but it's been known to be faulty every now and again.

The only hitch to this get along would be the stations setting up things to provide the discount for purchases made with a debit card. When pay at the pump first started there were still places that offered cash discounts as a holdover from the OPECers embargo - I remember there being some extra button pushing that was involved with that.
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Old 06-26-2008, 01:38 PM   #7
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Next time I make my monthly purchase of gasoline I will have to look and see if there is an option for ATM/debit. My memory says yes, but it's been known to be faulty every now and again.
Some of the local gas stations have the ATM/debit option.
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Old 06-26-2008, 01:48 PM   #8
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gas stations always made more money on the products in the store than on gas. i haven't paid cash for gas in years, and don't plan to start. if a station refuses to take cards, i'll just take my business elsewhere.
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Old 06-26-2008, 02:02 PM   #9
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I have two big issues with switching from a CC to a debit card to pay for gas:

1. I get a 5% discount when I use my PenFed CC to pay at the pump
2. See #1 above...
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Old 06-26-2008, 02:22 PM   #10
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I have two big issues with switching from a CC to a debit card to pay for gas:

1. I get a 5% discount when I use my PenFed CC to pay at the pump
2. See #1 above...

LOL... I was about to say the same (but not give the second reason)... but mine is Chase... I will be getting a PenFed in a few months... just to make sure...
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Old 06-26-2008, 03:13 PM   #11
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Quote:
Originally Posted by REWahoo View Post
I have two big issues with switching from a CC to a debit card to pay for gas:

1. I get a 5% discount when I use my PenFed CC to pay at the pump
2. See #1 above...
I get a $.15/gal discount when I buy at Kroger w/ Kroger CC.
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Old 06-26-2008, 03:25 PM   #12
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More on the gas profit margins at convenience stores:

"For retailers, the average profit on a gallon of gas last week was 11.7 cents, down from 14.3 cents last year. It was highest in the Northeast, at 17.4 cents, and lowest in the West, at 3.6 cents, according to Oil Price Information Service. California retailers lost an average of 3.4 cents last week.

Many retailers have tried to make up the difference inside their stores. While gasoline accounts for 71% of convenience stores' sales, it represents only 34% of their gross profits, which increasingly come from packaged beverages, hot coffee and foods prepared on-site."
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Old 06-26-2008, 04:00 PM   #13
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More on the gas profit margins at convenience stores:


Many retailers have tried to make up the difference inside their stores. While gasoline accounts for 71% of convenience stores' sales, it represents only 34% of their gross profits, which increasingly come from packaged beverages, hot coffee and foods prepared on-site."
Most quick stop & shop gas places have next to 0 labor cost in dispensing gasoline or diesel. New Jersey is one exception. The tanker driver fills underground tank, customer pumps, operates the "credit card register" .
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Old 06-26-2008, 04:02 PM   #14
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Most quick stop & shop gas places have next to 0 labor cost in dispensing gasoline or diesel. New Jersey is one exception.
Oregon, too.
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Old 06-26-2008, 05:32 PM   #15
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Originally Posted by FIREdreamer View Post
Either some bits of information are missing here or somebody gotta go back to school for math 101.



First example: 20 gallons at $2.75 a gallon. CC fee 2% = $1.10. Gas station markup 12% - 2% credit card fee = $5.50 (or $0.275 a gallon).

Second example: 20 gallons at $4.05 a gallon. CC fee 2% = $1.62 (not $4.00 as mentioned in the article). Gas station markup 12% - 2% CC fee = $8.10 (or $0.405 a gallon).

So the CC makes more money AND the gas station makes more money...
Quote:
say 2% on the purchase amount. When gas was sold at $2.75 a gallon, a 20 gallon sale would cost the merchant a $1.10, about five and half cents per gallon. With gas selling at say, $4.05 a gallon, that same 20 gallon purchase costs the merchant over $4.00, running 8.1 cents per gallon.
I sensed some funny math in the article- here is my take on the numbers:

2.75*20*2%=$1.10
$4.05*20*2%=$1.62

Where the article got $4 is misleading to me- where is that math?
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