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Outrage As Gas Cash-Credit Gap Reaches $1

Sunday, March 18, 2012 - 9:48 AM
Here's something that could ruin our use of gas stations for meeting reward checking requirements or getting 5% cash back on credit cards. From Newsday:
As if rising gas prices weren't enough, try this on for size: Some gasoline stations on Long Island are charging $1 more per gallon for credit card purchases -- or $1 less for cash sales, depending on how you look at it.

Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634
1. Sunday, March 18, 2012 - 12:50 PM
Well, don't patronize stations that charge you more for using your credit card. They will be VERY unhappy to lose your business -- because they make money off you even if they charge the same for using a credit card. If they don't want to make that money, fine, don't patronize them.

Unfortunately, they get away with it because people will just pay the extra charge and use their card. Those people are the ones who are keeping the price higher for use of the card -- if they did not do that, all the stations would have to choose not to charge extra for it because they would lose too much business otherwise.

I look for the low price and consider the use of the card in that calculation. As it turns out, I always end up at a station near me that charges slightly more than some stations' cash price but less than their card price, and does not charge for use of a card. With the 2% back on my Discover card, I still come out cheaper than the cash price at other stations by using it at this station. So, the other stations that are more expensive solely because they charge a fee for using the card ended up making NOTHING. The station where I go presumably made a little less on me because I use my card, but they did make money -- and the greed of the other stations made them nothing. 
me1004me1004373 posts since
Jan 16, 2010
Rep Points: 2,597
2. Sunday, March 18, 2012 - 1:07 PM
When I was visiting California there were ARCO stations that had generally cheaper prices for gasoline than their competitors around the same area. Their deal was that only debit cards or cash was accepted. NO credit cards. The scam perpetrated by the stations in Long Island, NY to charge a dollar extra for credit cards is probably one of those localized events that won't get any traction in other areas of the country. Customers wouldn't put-up with it and the franchise owners of those stations would eventually see a significant drop in business if they indeed tried it.
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
3. Sunday, March 18, 2012 - 6:30 PM
Yes, $1 difference at the price of a gallon of gas is not going to spread. And it is sheer gouging, as at the volume of sales they have, they are only paying the credit card company 1.5% to 2% for use of the card, yet even at today's gas prices, a $1 markup is about a 25% markup! That has nothing to do with recovering the cost of using the credit card. 

Funny that you pick Arco as the example. That leads me to the story of how all this got started: Arco declaring it no longer would accept credit cards, so that it could cut its price for cash-payers. You see, at the time -- a couple decades ago at this point -- it was illegal to charge more for use of a credit card. The idea of the ban was to move to a cashless society, for any number of benefits.The rule was that you did not have to accept credit cards, but if you did, you could not charge more for their use. Arco chose not to accept them.

But its competitors wanted it both ways. They continued taking credit cards, but some of them started a word game, saying they were not charging more for use of a credit card but giving a discount to those who paid cash. And that grew, and eventually spread nationally. I never heard of anyone bringing a court case to challenge that as illegal under the federal law barring higher price for use of a credit card.

At this point, it does not matter, as Congress -- what is it, two years ago I think, or maybe just a year ago -- finally changed the law, allowing a surcharge for use of a credit card. Now they don't even have to play word games. And you should expect to start seeing this happening at a lot more businesses than simply gas stations.
me1004me1004373 posts since
Jan 16, 2010
Rep Points: 2,597
4. Wednesday, March 21, 2012 - 2:45 PM
The first time this happened to me (higher price for credit), I didn't even notice until I had already started pumping. I stopped at $5 and went elsewhere. Now that I've learned that lesson, I always check before pumping, and if they have a higher price for credit I simply get back in the car and drive away. Of course, this isn't usually a problem since I check for the lowest price in my area, and I've gotten to know which stations are reliably cheaper than others and don't play games with cash vs. credit pricing.
nothlitnothlit7 posts since
Sep 30, 2011
Rep Points: 55