Consumers in New York have been fuming over outrageous surcharges for paying for gas with a credit card. Gas stations all over the country have been observed doing it, largely to be able to break even on gas sales.
Rage at fees for card use
Reports are emerging of gas stations in New York state assessing fees for using credit and debit cards that residents of the area are not pleased about. According to the Huffington Post, 18 gas stations in Long Island have been observed charging an extra $2 per gallon or more on gas purchased with credit cards. Other areas in New York state have also been found charging additional fees for using credit cards at the pump. Some stations are issuing service charges for using a credit card rather than a per-gallon fee.
New York forbids credit card surcharges, but merchants are allowed to offer discounts for cash purchases. As a result of the outrage, New York state congressman Lee Zeldin is proposing a law requiring gas stations to list prices of gas separately for cash and credit card purchases.
Black gold has little shine for retailers
Gas stations don’t make much money from the sale of gas. The typical gas station, according to USA Today, only makes about 25 percent of its profits from selling gasoline. All told, each gallon makes the station about 10 to 15 cents, according to SmartMoney. Gas stations make their money, just like movie theaters, on concessions. When one buys a Pepsi and a Snickers bar, that is what keeps the local Conoco in business.
However, the amount stations make is often eaten into by people paying with plastic. Because the fee is a percentage, it goes up with the price of gas. When gas prices are high, say around $4 per gallon like they currently are, it makes gasoline even less profitable.
Here to stay with high gas prices
New Yorkers aren’t alone. Gas stations in other areas have been observed offering a discount for customers who pay with paper. According to CNBC, some of the first reported instances of a cash discount were recorded in 2008, when gas prices began spiking, and the phenomenon has been cropping up ever since. For instance, Chicago-area gas stations were observed offering a “cash discount” in 2011, according to CBS Chicago.
Because high gas prices lead to gas stations having to pay credit card companies more per gallon, it is likely that gas station credit card fees are going to increasingly occur; gas stations cannot sell gasoline at a loss. The higher gas prices climb, the better it might be to start carrying enough cash to fill the tank to circumvent the fees.
CBS Chicago: http://chicago.cbslocal.com/2011/05/06/gas-station-adds-improper-fee-for-small-credit-card-purchases/