Cash for Gas Passes Senate Committee

Retailers can offer discounts without penalty

MADISON, Wis. -- Gas station owners will be able to offer discounts for customers paying cash without being penalized by credit card companies under a proposal that unanimously passed the Senate Judiciary, Corrections & Privacy Committee last week, according to State Senator Dave Zien, committee chairman and author of the legislation, said.

Zien's bill would prohibit large credit card companies from penalizing a gasoline retailer under contract for offering a discounted cash price.

Currently, gasoline retailers [image-nocss] are forced to pay a fee for each credit card transaction, plus usually another 3% of the transaction amount. Credit card fees add to the cost of gasoline, which are either forced on to the gas retailer or passed on to the consumer at the pump.

Gas station owners brought this problem to the attention of Zien. But the Department of Financial Institutions indicated that retailers can already offer cash discounts under federal law, and suggested that Zien's bill be amended to bring Wisconsin's statutes in line with federal law.

Current federal law provides that a credit card issuer may not prohibit a merchant from offering a discount to a consumer in order to induce the consumer to pay cash rather than pay by use of a credit card, according to a memo by the nonpartisan Legislative Council. An amendment to Zien's bill simply makes state law equivalent to federal law.

Federal law applies to any retailer, including gas retailers, who offer credit transitions. Likewise, the freedom to offer cash discounts under Senate Bill 180 would apply to all retailers, including gas retailers.

All Wisconsin retailers who accept credit cards would be able to offer a cash discount, as well as gas retailers, said Zien. Retailers will have more freedom to entice customers with lower prices, and cash-paying customers will no longer be penalized by paying credit card transaction fees.

Retailers who accept a credit card could offer a lower price for cash payments because a cash transaction would not be subject to additional credit card fees.

Allowing cash for gas benefits gas station owners and their customers, said Zien, who also authored a bill to eliminate the minimum markup on gasoline. This bill would lower costs for gas retailers, who could then pass on those savings to consumers.

The Department of Agriculture, Trade & Consumer Protection (DATCP) verified that gasoline retailers can advertise a lower cash price on a sandwich board or other placard by the road, as long as the conspicuous large street sign continues to advertise the higher credit card price. To address a question by retailers how to compute different gas prices, DATCP stated in a memo that there is, in most modern electronic pumps, the capacity to facilitate different computations for cash or credit.

Zien said the measure will also draw more customers into convenience stores where they may be more likely to make additional purchases, which helps small station owners be competitive, while still saving customers money.

The cash for gas proposal now goes before the full Senate, which is expected to take it up in this fall's session.