Using Credit Cards Hurt Gas Station Owners

Several Gas Station Owners have been hit hard by the rising gas prices, but not where you would expect. Credit card fees are eating into their profits and they're beginning to accept cash only.

This is how it works...

Credit card companies make it on both ends of the sale. First they collect merchant fees for every sale and then they collect interest on consumers who don't pay off their monthly short-term loan. Usually these fees run a few percent and sometimes as high as 5% for low volume merchants.

I can remember back when processing credit cards was a real pain in the butt. You had to look up the card in the "dead-beat" list that had a publication of thousands of cards that were stolen or over extended.

Then you called Visa or Mastercard to get approval for the sale. You talked to a live operator stating the facts about the card. The whole process took several minutes while angry customers wait in line behind them.

Sometimes you were instructed to cut up the card in half which was sometimes golden especially if the customer was a real prick. But as a merchant, you lose out on a sale and make your customer angry at you.

Today, you just swipe the card thru a card reader and you get back an approval in a few seconds. The process is all automated and hardly justifies the merchant fees they charge since there is no live operator anymore.

So are Gas Station Owners Justified in not Accepting Credit Cards?

Not really since the 2% merchant fee is built into the price. Eighty-percent of their customers are going to use credit and the other 20% will pay by cash. By using your gas card or cash back card, this price increase goes back to you in rebates.

Basically what they can do is lower the price of the gas to compete with other local gas stations. They will push their customers away, have lower sales and eventually go out of business.