Do we actually have a cite that ‘gas stations charge less for cash just to get you inside’ or is that just something that everyone ‘knows’ but it isn’t necessarily so.
It’s possible to understand that the business model does usually rely on food/drink and other sales but also not think there’s some master plan to force you inside the store besides some annoying ads at the pump. Lots of cash is always attractive to thieves as well.
Also, at night, many will lock up the store part and only service customers through the window outside.
Just curious, this isn’t FQ. I’ve spent my entire adult life hearing my mom repeat to me that the restaurant always makes you wait for a table because they want you to buy a drink at the bar. Even though both my brother and I worked in restaurants enough to know that is pure bullshit.
That’s a good one. I’ve lived in my house for nearly 30 years. I’ve lost track of the number of people who’ve remarked about how lucky I am to get a lower insurance rate because there’s a fire hydrant in front of the house.
Each of the houses we have purchased in Massachusetts, the insurance company has sent out someone to measure the distance from the nearest hydrant to the house. I don’t know if it made a difference to the premium or not.
Did not have this happen in three other states we’ve lived in.
I simply do not buy gas at places that charge more for Credit cards.
That is an important thing to remember- having Credit cards increases business. And experts say the increased business more than makes up for any fees (an exception is places with most purchases under $10, which certainly isn’t gasoline any more).
Then there is the added cost of cash, which is why some businesses won’t take cash-
Banks charge for large cash deposits. Having a lot of cash around means added security expenses, such as lockbox safes, armored car pick-ups, and expensive hold up insurance. Then there is the cost of robberies* and employee theft. Finally, at the end of shift two employees have to count and recount and verify the cash count, adding an extra hour of wages (it usually takes about half an hour).
I think this might be one of those things that varies depending on where you live - nobody has ever measured how far my house is from a hydrant almost certainly because there’s a limit in this city as to how far a house can be from a hydrant and 50 ft vs 100 ft probably doesn’t matter. But if it might matter if it was an area where a house could have a hydrant right in front or be half a mile away.
I used to sell home insurance - distance to fire hydrant was a significant factor, as well distance to your nearest fire station. I had a policy jump $1500/year because the nearest fire station closed and the next one out was 5 miles away.
Grocery stores also have low profit margins – most websites I visited said 1% to 3% (although of course they may be getting their values from the same source).
Should we expect grocers to start charging a surcharge for credit card purchases? If not, why not?
GROSS margins for grocery stores are usually in the 25%-30% range. On gas the margin is 5-7%. Losing 2%-3% of sales to payment processors is losing 30%-40% of your gross margin and leaving you with 3-4% of sales for all other costs and profit.
There is simply no comparison in the impact payment processing costs have between these two businesses.
If you live in a relatively residential area, you likely have the same risk factor as someone further away from the hydrant - any planned community is going to be following code. It’s the rural areas that have issues. One house I had to call up the fire chief to get the rating directly from him - he had to go out and double check that the retention pond the house builder put in specifically for fires was still full!
I don’t have a cite, but I think it’s clear that gas stations (and other places) that give a discount for cash do so because they believe that it improves their margins in some way. It could be that people who go inside to pay buy more stuff inside with a higher margin. It could also be other things. A few things it could be.
Their costs for handling cash are lower (or they incorrectly think they’re lower)
Competitors provide a cash discount, and they’ll lose out on cash-paying customers if they don’t also do so.
Credit-card paying customers are less sensitive to higher prices (there’s some psychological support for this).
Cash payments are easier to take off the books, which results in (fraudulent) tax savings.
Several of these are more likely to be true for small operators rather than large chains or franchisees of nationwide or regional banners who can piggyback off the franchiser’s platforms and are subject to their accounting controls.
Do people really see Shell, Mobil and Exxon stations offering cash discounts? I haven’t seen that in many years.
I don’t have much experience with franchises, but surely the setting of fuel prices is a local conditions thing, and a franchisee would have the power to do so, right?
I also regularly see major brands with different cash/credit prices.
Hmmm. I’m looking at the ten nearest gas stations to me:
2 Shell
2 Sunoco
1 Mobil
1 7-11
1 BP
1 Cumberland Farms
2 independents
All on a 3 mile strip of a major arterial road.
One of the independents has a cash discount. Cumberland Farms has a 10c discount for using their payment card (an EFTPOS card I believe). None of the others have any kind of discount based on tender type.
Maybe it’s a regional thing. Or maybe it’s more common in urban areas or rural areas. I remember this being ubiquitous 25 years ago.
There is independently owned and operated and then there is “independently owned and operated”.
In reality the Shell, Mobil, etc brand isn’t just the additives in the gas. It’s also a set of back-end services and requirements. Not nearly as strict as McDonalds, but they can’t do anything they want either.
One of the areas where there are controls/support are the POS systems and payment process.
The family that owns the Shell/Mobil/Exxon/BP station in your town isn’t going to Chase Payments to negotiate a deal on credit/debit processing. At least not in my experience. They use the Franchiser’s deal. They also have to honor the loyalty programs and marketing tie-ins the franchiser negotiates. There are exceptions, but those are exceptions.