I may be out of date, but I had heard that debit fees are often higher than credit. That is why the card dealers pushed debit so much. Not sure that is current though.
I have never used a debit card in my life, so I am not current on what they involve.
Speaking as a store owner (although it’s not a gas station), we had a machine last year that charged us three ways: first, a $10 monthly fee, regardless of how many cards were swiped, second, a 20 cent transaction fee on each swipe, third, a processing fee based on the size of the transaction. The third fee varied widely depending on the type of card used, ranging anywhere from 0.01% on debit cards up to 4.3% on certain credit cards. The vast majority of credit cards were in the 3%-4% range. If you took the total fees for the month divided by the total amount paid, it usually ended up being about 3.5%.
Until recently, both Visa and Mastercard specifically forbade their merchants from upcharging to compensate for card fees. You can’t put a $25 price tag on an item and then, when the customer hands you their Mastercard, say “ohh I’m sorry, it’ll be $26 now.” But you ARE allowed to say “The price is $26 but if you pay cash I’ll sell it to you for $25.” That was the rule for both Visa and Mastercard until about six months ago.
Now VISA has changed their rule. They permit upcharging for cards, but the merchant has to disclose the fact up front, and they have to have VISA’s permission in advance to do it. Mastercard still doesn’t allow upcharging.
FWIW, we recently switched to another processing system which charges us a flat 2.75% on every card, regardless of what kind of card or how many transactions we do in a month.
Have you actually compared the per gallon price? When I do, prices vary across chains of course, but typically the credit card cost reflects the standard market price that matches chains that do not provide a cash discount.
I would use cash more if it wasn’t so inconvenient. Most gas pumps are “pre-pay.” So using cash requires (depending on where/when) going in and standing in line, often behind several people buying sodas or a pack of cigarettes or a single cigar. Plus, I don’t always have a predetermined amount I want to spend.
I am poor enough that the typical hold amount on a credit/debit card can be financially difficult, and I buy 2-3 gallons sometimes.
My best place for buying gas is a local grocery store, where I typically get 30 gallons “free” per month, and they allow paying in cash after pumping as long as I swipe my loyalty card first. There’s another grocery store that gives discounts on Shell gas for buying Shell gift cards, and I take advantage of that. However, I never get a discount for paying cash and don’t think I have seen these discounts offered in many years (where I drive/love, anyway). I mostly go to the grocery stores, Shell, and BP.
I don’t understand this attitude. That merchants have to pay a fee for credit cards is well known; isn’t it logical for them to pass on the fee?
Frankly, I’d take the opposite view. I sometimes asked for (and often received) a discount when paying cash. Merchants that declined to give me a discount when I reduced their cost were, in effect, saying “Fuck you” to me.
Around here it’s mostly the cut-rate stations that charge less for cash transactions. Even if you pay with a card, you’ll still usually pay less than you would at stations that don’t give the discount. That’s why the policy doesn’t drive away customers.
You can avoid the temporary card hold by going into the store and asking the clerk to swipe it for just the amount you want to spend. Of course then you have to stand in line…here many stations all sell lottery tickets and damn those lottery ticket buyers annoy me. But that’s a whole different thread.
Because my typical gas expenditure is between $300-$400 :eek: per month, depending on where I’m working, I look for the cheapest per-gallon price no matter what. Quite often that’s Kroger grocery stores, because I can usually get .20 cents off per gallon (and I’ve never seen them charge differently for cash/credit.)
Some of my clients are older farmers. When I tell them $423.00 they pull out a roll of bills and ask if I accept cash, while raising and lowering their bushy eyebrows. I then ask for $400.00. It all gets claimed, but they think we’re doing some shady deal.
IIRC - it’s the cardholder agreement that prevented a different price if you pay cash. After all, VISA etc don’t want the word on the street being “use our card and pay more.” The fee was supposed to be for the convenience of not handling cash, plus the option to attract customers who might bypass cash-only stores. I believe the change came about when the law was “clarified” that telling merchants what to do violated antitrust laws.
(I remember a gas station in Michigan around 1980, their trick to get around this was “This row of pumps is cash only!”. Needless to say, the price there was lower.)
The fee can vary from 1.8% to 4%, depending on how big an 800-pound gorilla the retailer is, and volume, etc. From what I understand, typically it’s 2.5% to 3%. Another fun gotcha for the merchant - the latest, greatest push is “reward cards”, points for everything from air miles to cash back. Apparently these cards have a higher fee percent for the merchant, which they find out the hard way when they get their monthly reconciliation. So… cards cost money. Real money.
If you consider that a lucky retailer can mark things up 10%, losing 3% is a substantial cut of your profits - for what? less cash handling? There’s value to avoiding cash -less losses to robbery and petty theft. Not sure what the typical merchant rate for chargebacks is, but based on the fact that the clerk rarely verifies my signature, it must be pretty low. Now, with chip and pin being used in civilized countries, the risk is even lower.
IIRC, debit charges a fixed fee. There was a series of congressional hearings about this a year or two ago, and suggestions to lower the maximum fee from 25 cents or more to 12.5 cents. However, the debit percent is much much lower. So for a purchase of $10, a 25-cent fee is 4%; for $20, it’s 2%. Unless you are buying gas, and spending $100, the cost is high. Credit makes more sense than debit for purchases under about $20. I have seen smaller merchants in Canada with homemade signs “No debit for purchases under $5”. At 5% fee (25 cents on $5) debit would be killing profits at a small convenience store. Debit for a soda or candy bar would wipe out any profit.
As for the merchant ripping you off by offering a cash discount… Sorry, it’s the other way 'round. If you pay credit, and the merchant does not offer a cash discount, the cash customers are paying for your convenience, they are carrying you by providing much of the merchant’s profit. It’s your call - is it worth 2.5% (10 cents on $4) to avoid carrying and dispensing cash? (For the merchant, is it worth 2.5% to not have to store and handle large sums of cash?) In today’s world, every convenience carries a cost.
(There was also a thread on tipping where one person mentioned a restaurant where the owner subtracted the entire credit card fees from waiter’s tip - i.e. $100, $10 tip, the $2.75 fee would be subtracted from the waiter’s $10 tip.)
I don’t get it either.
Consider this example:
Station 1:
Cash=3.95
Credit=4.05
Station 2:
Everyone=4.05
And people are angry with Station #1 for giving them an option of saving money if they use cash? That doesn’t make sense.
Yeah, I’ll pay the extra 50¢ or 60¢ when I fill my tank at Arco. It’s worth it to not have to record the transaction in my check book. I might get cheaper fuel at Fred Meyer (I think it’s the same price as Arco’s cash/debit price, and I can get a discount with my Fred Meyer loyalty card), but it’s on the other side of the freeway and often has long lines.
Talking to a gas station owner once, he said that they loved cash transactions because they can do “creative accounting” for tax purposes. I do not know how much this is true or how much benefit it brings to the business.