WASHINGTON -- The Electronic Payments Coalition (EPC) is claiming that a new report shows that there is "no evidence" that gasoline retailers are passing along the $1 billion in savings from the Durbin Amendment to the Dodd-Frank financial legislation that capped what retailers pay to accept debit cards beginning in October 2011.
The National Association of Convenience Stores (NACS) and the Petroleum Marketers Association of America (PMAA) have strongly condemned the findings of the report, which they claim is seriously flawed.
"It is hard to give a respectful answer to the ridiculous claims by EPC," PMAA president Dan Gilligan told CSP Daily News.
"Their premise--that retailers did not reduce prices--shows, first off, that they don't know anything about gas retailing," NACS spokesperson Jeff Lenard, also told CSP Daily News.
The EPC said that gasoline retailers are pocketing the savings "at the expense of consumers," citing the U.S. Energy Information Administration's data showing that nearly 134 billion gallons of gasoline were sold in 2011, with approximately 48 billion gallons purchased using debit, which reduced interchange rates by about 70% for this category.
According to new research by Phoenix Marketing International, half of all noncash payments for fuel are made with a debit card (36% of all payments including cash), making it overwhelmingly the most popular payment choice at the pump.
Click here to view the full Phoenix Marketing report.
"For gas station purchases, consumer preference for debit cards has increased substantially over the past several years--at the expense of cash, checks and credit cards," said Greg Weed of Phoenix Marketing. The research among 5,166 consumers reporting on recent gas station purchases found that the debit card share of both transactions and dollars was higher than any other payment method.
Cash discounts are common in gasoline retailing, "while discounts for debit--the very area where gas retailers received the Durbin subsidy-- are virtually nonexistent," said Trish Wexler, spokesperson for the EPC. "Cash discounts lure customers away from the convenience of the pump and into the convenience store, where they are lured into buying items with high markups," she charged.
"No one is surprised to see that gas retailers are keeping billions of dollars for themselves, while their customers continue to be punished at the pump," she further alleged. "Americans should go to their gas stations and demand what's theirs--a discount for debit."
The new research repeats the conclusions of an EPC survey it released in December (see Related Content below for previouscoverage).
"Their last 'study' found very convenient items, like peanut butter, that had skyrocketing wholesale price increases, to justify their premise," Lenard said. "It's ridiculous that these [studies] are even called research."
He added, "The first quarter of this year, according to [the Oil Price Information Service], the average national gross margin for gas was 13 cents per gallon. If you can break even on 13 cents a gallon for the first quarter, you did well. So for them to accuse retailers of being the reason prices were high, clearly shows they know nothing about gas retailing.
"I can't imagine how they can say that retailers did not pass on savings, because we know how incredibly competitive gas retailing is. We know what the customers will do to save as little as a penny a gallon, and the margins demonstrate that retailers had a 'street fight' every day for that gas customer. If retailers take cost out of their system, they pass it on to retailers and they get more customers and more in-store traffic. That's the way it has worked for quite some time in the gas market."
Gilligan also responded, "It is really pathetic that we have credit-card companies profiting seven to 10 cents per gallon on gasoline complaining that retailers are profiting too much. The first quarter of 2012 was dismal for gasoline volumes and margins and many retailers lost money on their gasoline sales. One thing EIA numbers do reveal, and they have revealed this consistently for over 20 years--gasoline retailers as a group always pass along savings to consumers. It's called competition, something credit-card companies know very little about."
The EPC has set up a website to make its case to consumers: www.WheresMyDebitDiscount.com. The group includes credit unions, banks and payment card networks that move electronic payments between merchants and consumers.
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