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Interchange fee hitting gas station owners’ pocketbooks

Wednesday, June 18, 2008 | 9:40 p.m. CDT; updated 9:42 p.m. CDT, Monday, July 21, 2008

COLUMBIA — Although oil companies nationwide are beginning to feel the pinch of increased costs because of credit card interchange fees, most gas stations in Columbia plan to maintain current card policies.

The fees, which are fixed percentages that must be paid to card companies for every transaction, do not usually exceed 2 percent of the purchase. But fees rise with the cost of goods or services. As gas hovers around $4 per gallon, the fee translates to about 8 cents per gallon in interchange fees.

Columbia oil suppliers have not yet felt the need to do away with credit card transactions perhaps because Missouri tops the list of lowest gas prices.

A spokesman for QuikTrip, which has two locations in Columbia, says he doubts a future card policy change because of the frequency of credit card payments.

“Seventy-five to 80 percent of our transactions are done with credit cards,” said Mike Thornbrugh, manager of Public and Government Affairs for QuikTrip.

But the fees are causing headaches for some owners in other states.

Roger Randolph, manager of Mr. Ed’s Chevron in St. Albans, W.Va., decided to ban credit cards as his station paid $500 per month in interchange fees, according to The Associated Press.

“I can understand why he did it,” said Cindy Mutruf, owner of Tiger Sinclair, of Randolph’s decision.

Tiger Sinclair does, however, have a minimum purchase policy for credit card merchandise sales. Customers must spend at least $3 if they plan to pay with a credit card.

Several stations, including Tiger Sinclair, have a “pay before you pump” policy to curb gas theft. QuikTrip began the PumpStart program about four years ago due to theft problems.

“We were losing twelve to thirteen million dollars a year, which would be close to $40 million by today’s prices,” Thornbrugh said.

The program requires customers to either pre-pay or swipe a PumpStart card at the pump before fueling. PumpStart cards are linked to customers’ drivers’ licenses, so if they fuel and run, QuikTrip deactivates their cards and prosecutes.

“At these prices, people aren’t making any money” with the fee at its current level, said Jeff Lenard, spokesman for the National Association of Convenience Stores. “It’s brutal.”

Lenard’s group reports convenience stores paid roughly $7.6 billion in credit card fees last year, while making $3.4 billion in profits.

The way interchange fees are structured has long annoyed retailers, prompting calls for relief.

Legislation pending in the U.S. House and Senate would allow merchants to bargain collectively with major credit and debit card companies.

The National Retail Federation says gas prices point to the unfairness of the system: Gas stations are paying more in interchange fees because the price of gas has gone up, while the cost of processing credit or debit cards remains the same.

“We have always contended that it doesn’t cost Visa and MasterCard any more to process a $1,000 transaction than it does a $100 transaction,” said J. Craig Shearman, vice president of government affairs at the retail federation.

The credit card companies say fees are just part of the cost of doing business.

Other companies, such as Break Time and Casey’s, have not experienced theft issues dire enough for a pre-pay policy.

“We’re only open to 11 p.m., so that helps,” said Bill Walljasper, Casey’s chief financial adviser.

The Associated Press contributed to this report.


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Comments

Jorge Maass September 9, 2008 | 5:46 p.m.

Help is on the way, a Dallas Texas group is working on a patent pending system that will allow the transfering of an approved visa/MC credit card transaction in to a participating oil company credit card account on the spot, without the need to fillout a credit application, this system will eliminate the fees charged by bank issued credit cards. For more information write to maass_jorge@yahoo.com

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