I see the signs for gas stations offering their prices, per gallon, for the different types of fuels offered at the pumps. In a lot of instances, the sign will also indicate a price-per-gal if paid with cash and a different, higher price if paid with credit (in virtually all instances I’ve ever seen it’s been a ten cent/gal increase).
I guess I’ve never given this a lot of thought but why would they de-incentivize using the ease of credit in such a manner?
Am I actually paying up to $13 (I have a 13/gal tank car; 10 cents/gal…) more to fill up my car using a credit card vs using cash? That seems nonsensical.
Because they have to pay a fee to their credit card processor when you use a credit card and because people seem to be willing to pay extra for the convenience of using a credit card.
I’m glad it seems nonsensical since 13 x $0.10 = $1.30, not $13.
This reply was written before the OP was edited.
If I remember correctly, the original version of the OP asked:
Does this really occur?
Why would they do this?
Would I pay $13 extra to fill up my 13 gallon tank? This seems nonsensical.
because accepting a credit card payment is not “free.”
because while they can’t apply a surcharge for a credit card payment, they can offer a “cash discount.”
because they don’t make any money on fuel sales anyway, they can take a bigger loss by making you go into the storefront to pay and hopefully also buy a soda or a cup of coffee which actually makes them some profit.
A local indy coffee house charges 20 cents if not using cash. I never understood why the penalty. Is it some kind of message “against the man”? Or what?
the merchant often has to pay some variation of about 2% plus $0.35 per transaction. There are dozens of variations on this depending on the size of the ticket and the volume of transactions. For example, my biz we pay 1.7%+.35 per. for many cards, 2.75% + .35 for “rewards” type cards, etc.
This may not sound like a big deal but when I have a customer order 4 computers for $2800 and am looking at paying $60 to swipe a card it kinda makes you annoyed.
If I get a pin debit transaction it costs me $0.35 flat fee. So we like those. Even a common $100-$150 repair it saves us $1-2 per transaction.
IIRC The original reason given was because of the CC fees and also the tight margins on fuel sales. The ‘go in and buy stuff’ came as happy a result of charging more for credit, and getting more cash sales on higher profit items and after ‘pay at the pump’ was common.
A surcharge for using credit cards is not allowed…a discount for using cash is allowed. But it must be very clear that it’s a cash discount and not a upcharge for using credit. If you go to the Visa or MC website and look up their Merchant Agreement you’ll be able to find it in there. Also, last time I checked, Amex didn’t care what you did unless you accepted MC/Visa as well in which case then they adopted the same rules.
I’m guessing the extra 10 cents a gallon is actually more than the fee for the CC charges.
PIN debit also has benefits in the “less likely to be charged back” only one person is supposed to know that pin number, where hundreds of merchants may have records of the basic CC info.
This is a benefit to you as the vendor, not to your customer. If it turns out you sold a lemon computer and refused to stand by it, your customer would be forced to take you to court to seek redress, whereas with a credit card they need only make a phone call and fill out some basic paperwork.
As for the “benefit” of pin based transactions not being disputable, the reality is that the consumer protections of using a credit card are rooted in fair billing and claims & defense laws.
Additionally, it should be noted that credit card provide merchants with conveniences as well, namely cash handling and bank deposits.