Credit Cards cutting into already tight profit margins at gas pumps

Monday, 06/16/2008

A Kanawha County gas station might be leading the charge toward banning credit card use at the pump. Mr. Ed. Chevron, located on the corner of Kanawha Terrace and Walnut Street in St. Albans, stopped taking Visa, MasterCard, American Express, Discover and other major credit and debit cards on June 1. Manager Roger Randolph said the station could no longer afford the high surcharges that gas retailers have to pay to credit card companies each time customers pay with plastic. Randolph said for each $50 charge for gas, the station loses about 98 cents. With gas now at an average $4.03 cents a gallon, Randolph said more expensive fill-ups at $50 or more are the norm, and they're are eating up the station's profit margins. "You can't make any money now off gas," Randolph said. "It used to be we'd maybe lose 4 and 5 cents a gallon when taking Visa or Mastercard. Now we're losing 13 and 14 cents a gallon." Randolph's father, Ed, owns the Chevron station. The station now will only take Chevron and Texaco cards because they are parent companies and do not have surcharges. Jan Vineyard, executive director of the West Virginia Oil Marketers and Gas Association, said credit card surcharges have become a huge problem for station owners everywhere. Vineyard said Mr. Ed's Chevron, however, was the first she has heard of in West Virginia that has stopped taking major credit cards. She said every time a customer uses a credit card at the pump, the station has to pay a 2.5 to 3 percent transaction surcharge on the payment to the credit card companies. In 2007, credit card surcharges placed second behind labor in expenses for gas stations in the nation, Vineyard said. Labor costs made up 32 percent of expenses, while credit card surcharges made up 10.5 percent. Credit surcharges were a higher expense than health insurance and payroll taxes, Vineyard said. "The fees are so high retailers aren't making any money off gas," Vineyard said. "When they have to pay those fees, credit card companies are actually making more money than the gas stations."

 

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