questionsgas station credit surcharge - your state haveā€¦

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I'm not sure that I understand the question...can you give us a link to look at?

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As soon as I get a surcharge for gas I am no longer paying at the pump, just ask my bank about ATM cards.
@jsimsace: http://consumerist.com/2012/04/24/ny-gas-stations-tack-on-2-per-gallon-credit-card-fee-1/

vote-for3vote-against

It comes and goes here. A few years ago it started back again and it seemed as though it was every station around, but that quickly stopped. A couple will occasionally go back to it but I steer clear. I would intentionally stop at the bank on the way home so I could pay cash when all the stations had the surcharge as often as I could. Now I will avoid those stations, even after they stop charging extra. Generally, they lose my business for good.

vote-for9vote-against

It's generally couched as a "discount for cash," rather than a "surcharge for using a credit or debit card," since most Visa and Mastercard agreements prohibit charging for the use of the card.

This is a basic explanation:

Under the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, every use of a debit/check card generates a swipe (or "interchange") fee of $0.21 which goes to the financial institution which issued the card (your bank or credit union). In addition, if you use the card on the credit side (no PIN involved) or if you're using a genuine credit card, the credit card company charges an average of 2% to the merchant for allowing him to accept the cards.
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(continued)

Offering a discount for cash is actually a financial benefit to cash customers, since it eliminates their being forced to subsidize the use of the cards by other customers. (You already knew, of course, that the gas stations' charges for gas included all those fees, right? You didn't really think the stations paid them, did you?)

So essentially, customers are now seeing the card-costs that used to hidden to us. The process is now much more transparent. Everyone's annoyance at this is the exact reason card-companies fought desperately against this legislation for years; they absolutely did not want any of us to know how this all worked. Now you know that by paying cash you're actually saving money.

For a really detailed and totally miserable to read explanation of all this, check out wiki: http://en.wikipedia.org/wiki/Interchange_fees

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@mkdr: Please see my explanation above. All that's really changed is that we customers now get to see how the credit card companies treat us, and we can choose whether we want to subsidize their cards or not. Before the Dodd-Frank Act, we all paid the card fees, even if we didn't use cards at all, because the cost of the fees was built into the cost of a gallon of gas.

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Quite a few stations around here have them, and I tend to avoid them. I usually stop at stations that don't have them (Speedway and 7/11, notably, do not have them). While I do understand the legality of the loophole, it bugs me, because to me, this "cash discount" breaks the SPIRIT, if not the letter, of the standard credit card merchant agreement which states that you cannot charge a customer extra for paying with a credit card.

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@caffeine_dude: Thanks, but wow...$2 per gallon? And it's legal? Y'all can have the big cities. :)

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@djp519: The flip side of that, though, is why in the heck should Customer A, who never uses plastic and always pays cash for everything, have to pay a jacked-up price for gasoline just so the credit card companies and the merchants can make sure that the card fees generated by Customer B are getting paid?

As far as I'm concerned, we should all demand a cash discount from every merchant we patronize. I absolutely assure you that every price in every store that accepts plastic has been adjusted upward to cover the store's merchant-fee costs. We're only seeing the eye-bulging numbers at gas stations because they're seriously competitive on pricing.

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@jsimsace: Please remember that they can charge $25/gallon if they want to; there's no government regulation of product prices. The salient question is: will anyone actually pay that price? Generally, the answer is no. What the stations really want is for customers to pay cash, so they're making it seriously unlikely anyone will use plastic.

When we were in NC a couple of months ago, most of the stations we saw were "discounting" $0.08/gallon for cash. We didn't have much cash with us on that trip, so the additional $1.20 per fill-up was just a part of our vacation costs. If I lived there, though, we'd be paying cash.

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@magic cave: Hmm, sounds like my logic is flawed then and actually I should be patronizing the stations with differing price points since they place the burden of the credit cards only on credit card users. I guess if I thought it through a little more I would have eventually figured it out, but your explanation made it much easier. I kind of feel like an idiot now ;) Seriously, thanks for the info!

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@magic cave: I see your point, yet in our area Wal-Mart is offering a 10-15 cent discount for using plastic....who loses there?

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Around here at least, gas stations tend to be grouped together (based on zoning) so you'll often have brand y and brand x with identical pricing, but one with same price cash or credit, vs the other which adds a 10 cent surcharge or so. Yes, technically the cash price is a discount, but lets face it.. it's a surcharge for credit. So in these cases - it's not that the brand doing the surcharges are saving the cash payer money... their "discounted" price is the same as other stations..

vote-for3vote-against

@jsimsace: the 2$ per gallon extra isn't typical, but yes it's been done. That usually doesn't fly for very long though as people will often be outraged enough not to buy there.. even with cash. Gouging was also rampant during the hurricane aftermath until our governor started imposing an escalating, per incident fee starting at 10,000.00 for price inflation of (x%) over the normal variance.

the 10+ cent s per gallon, while more "acceptable" is still silly IMHO.. i call it the cost of doing business.. If i tried charging my customers extra for credit card payments, i'd be laughed out of my field.

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The 10-15 cents per gallon is a discount for using plastic.

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@jsimsace: me? oh i get that, i was just talking about the typical upcharge for credit card use at the rest of nyc area stations.

vote-for5vote-against

If you pay with plastic, it's a lot harder for employees (or owners) to skim off the top. Cash transactions, it's a lot easier to avoid the paper trail. Plus, there is an overhead cost associated with handling all that cash - more time spent counting down drawers, bank deposits, etc.

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@jsimsace: They do that to encourage people to use the plastic so they can track and mine your purchasing history data (like loyalty cards). That is worth more to them than the credit card fees.

To answer the original question, we have had a 10-20c surcharge on credit cards for gas in MI for years. Meijer stores and Sam's Club (when they have a station) are about the only ones who don't do it.

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@mkdr: No need to feel "like an idiot." This stuff is incredibly confusing, mostly because the Big Banks want it to stay hidden from consumers so they can charge what they want when they want to. I try to stay abreast of it, mostly so I can keep up with my spouse's rants on finance [grin], but it's a real struggle to do so.

I'm just glad there's finally a way to see where my money goes so I can decide if the extra cost is worth the convenience. Here in Florida, so far, we haven't seen any of this jostling around, and most gas stations in my area are at $3.25 for regular.

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@jsimsace: In business, every cost is paid by the customer, one way or another. Are you saying your prices don't cover your credit/debit card fees, or just that you don't make them visible to your customers?

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Don't know why so few gas stations don't take debit at the pump - only as credit. But either way, a 20 cent per gallon surcharge is outrageous for either one. Let's say gas is $4/gal. On 10 gallons of gas, it costs 21 cents TOTAL to accept debit. For credit, it would cost maybe (at a full 3%) 12 cents per gallon. And for every gallon, that's a profit of 8 cents surcharge per gallon, which really adds up. Especially when you consider how low the markup is on gasoline. The average markup on a gallon of gas nationwide is about 15 cents. So they're getting 50% more profits by pretending it costs them so much to accept credit cards.

vote-for1vote-against

@magic cave: We consider the fees as a cost of doing business...we absorb them.