Missouri residents are being hit hard in their pocketbooks by high gas prices. It’s a burden to consumers and our economy everywhere, especially as America fights its way out the current recession. I’ve been studying the numbers behind the price that we pay at the pump, and I’ve learned some interesting things that I want to share with you.
In October 2011, the Durbin Amendment capped the interchange fee a merchant pays on debit card transactions that should have, in theory, lowered gas prices. Some on Capitol Hill claimed that the interchange cap would put more money in the hands of consumers. But we now see that the savings have not been passed on to consumers at the pump.
Just seven months later, gas retailers are reaping a $1 billion annual windfall at the expense of consumers. In fact, under the Durbin Amendment, gas retailers now save 4 cents per gallon in debit card interchange fees when consumers fill up an average tank of gas. If you guessed that debit cards are the most popular form of payment at the pump, you’d be right. Despite this fact, gas retailers are not often passing that savings on to consumers like you. Four cents per gallon may not sound like a lot of money, but think about how much that would save your family over the course of a year.
To add insult to injury, gas retailers are falsely claiming that the high cost of gas is related to high interchange fees. Nothing could be further from the truth, as I find. Since gas prices spiked in 2007, MasterCard, which houses its Operations Center right here in Missouri, has voluntarily capped the interchange fee on credit card fuel purchases greater than $50 to help gas retailers stay afloat while keeping prices low for consumers. Interchange is free on MasterCard fuel purchases greater than $50, which translates to 2 cents per gallon savings for gas retailers on a fill-up. For consumers, that’s another cost savings that all too often is not passed on at the pump.
Congress, gas retailers, convenience stores and big-box chain stores pushed this legislation with the promise of consumer savings. Despite the current economic hardship of high gas prices, most consumers have yet to see a cent in savings while gas retailers pocket $1 billion per year. I think it’s time for gas retailers to offer debit card discounts to consumers, right here in Missouri and around the country. And clearly, it’s time for the Durbin Amendment to be repealed.
Don Wells is a Missouri State Representative that serves the residents of the 147th District. He is currently chairman of the Financial Institutions Committee in the Missouri House.