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I went to the gas pump the other day and used my debit card as a cc. Not only did I notice that the price was higher for those paying with cc's, but when I checked my bank account the next day I saw a 56$ fee for a 26$ purchase!! I later learned that they put a hold whenever gas is purchased for a minimum of 55$. Why is this? Im very curious.
The price is higher because the credit card companies charge the stations a fee to process the payments- the alternative is to charge everyone the higher rate, which penalizes those who pay cash but puts more $$ in the operator's pocket. I can't comment on the hold on your credit card- my card company doesn't do that.
The Exxon I use puts a $1 hold..I believe to make sure the card is valid then when it processes the $1 charge goes away replaced by what I purchased in gas
I never heard about a hold being placed but I can confirm that they charge more because they get a charged a fee from the credit card companies. If you have a rewards card, they get charged even a higher fee.
Here's the thing, though..... as a business owner (not a gas station), I don't charge extra when a person uses a credit card. I don't know of other businesses who do, either. Why do gas stations get away with this? This practice was around years ago and then I thought it went away.... apparently, it's back in some gas stations. I try to avoid those stations whenever possible.
Gas stations operate on very thin profit margins. They average about a 12 cent profit on every gallon that is sold. However, as prices increased, their credit card fees increased. They pay about 2.5% of the sale price in credit card fees, so that cost them 5 cents when gas was $2 per gallon, but increased to 10 cents when gas went to $4 per gallon (and at those prices, I think the cash discosunt was running about 10 cents per gallon); so their fees essentially doubled while the number of gallons sold was the same. And I think it was when gas prices shot up that many gas stations went back to trying the system of charging more for credit customers.
(As someone that usually pays with credit card, I prefer the same price for both, but I recognize that the cash customers are subsidizing my convenience.)
i refuse to patronize a station that charges more for CC purchases (I think it's actually illegal to do so, so they tout it as a "cash discount" - however, when they started this practice, the CC price went up (the cash price did NOT go down), so don't tell me it's a "cash discount"). over time, this has gotten increasingly difficult, but there are a handful of stations around that don't charge more, AND have cheaper prices.
i find this practice abhorrent - especially if one uses a debit card which does not incur fees.
i find this practice abhorrent - especially if one uses a debit card which does not incur fees.
Actually as long as the attendant runs it as debit and you enter your PIN you pay the cash price. I stopped for diesel the other day at a station on Route 1 across from Quaker Bridge mall in Lawrence (Amoco I think) and when I went inside to the pay the attendant saw my card and told me to pay via debit rather than credit to get the $0.05 less per gallon price.
It does vary quite a bit, but I think 10-12 cents is closer to historical national average (I used to finance these businesses). Some operate on less profit to try to get more traffic into their convenience store. But the main point was that the profit margin is very thin, and the rise in prices had a big impact on them since they basically doubled the credit card fees they had to pay on the same amount of gas that was sold, due to the rapid climb in pricies.
The price is higher because the credit card companies charge the stations a fee to process the payments- the alternative is to charge everyone the higher rate, which penalizes those who pay cash but puts more $$ in the operator's pocket. I can't comment on the hold on your credit card- my card company doesn't do that.
This is true with credit cards but not with debit cards. There is no merchant fee on debit cards but the merchant lumps these 2 together and is raking in the extra revenue from it.
Just to explain this further, the merchants pay the credit card companies anywhere from 2 to 6% of your purchase as their merchant fee. So if you bought a Burger King lunch for $10 and charged it, the CC company pays Burger King that $10 minus from 2 to 6%. Now think on a larger scale if you bought a new furnace for your home perhaps. The CC companies are cleaning up.
To the OP, you are saying you are surprised to see the 56 cent fee deducted? You are given the option of paying with your card at the pump and are informed that you will be charged this fee or you can cancel. Exactly like the ATM asks you if it's ok to rape us for the $2.00 for the right to take out our own money. So I wonder why you seem like you are unaware of this. You had to press YES or NO. It is against the law to deduct junk fees without your permission.
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