FARMINGDALE, Maine -- Ron Mason has closed the gasoline dispensers at his Airport Automotive station in Farmingdale, Maine; he will continue to run the business, but only as a full-service auto repair shop. He said he is fed up with fluctuating gasoline prices and credit card fees that have been eating up his profits.
When you're paying almost 3% to process credit cards, and that includes debit cards, that's 9 cents right off the top, Mason told The Kennebec Journal. When you're only making 5 to 7 cents a gallon, that doesn't add up. Along with that, [image-nocss] as the dollar figure goes up on gasoline, the credit card expenses increase as well.
Credit card companies and banks get an average of 1.75% on every gallon of gasoline sold, and credit card processing fees now rank as the second-biggest expense for stations operators, according to the report, citing the National Association of Convenience Stores (NACS).
Nationwide, 65% of gasoline purchases are made with credit or debit cards, said the report.
Mason is not alone in the area in his decision to stop selling gasoline, the newspaper said. James Fitzpatrick, owner of Jim's Variety in Fairfield, Maine, did the same thing. He said he was doing all the work by providing the labor, maintenance of the pumps and insuranceand someone else was getting all the profit.
I haven't sold gas since the end of March, Fitzpatrick told the paper. At the time, the company that was supplying me with the gas quoted me 3 cents more than Cumberland Farms down the road was retailing it for. So actually, in 2006, when you figure it all up, I lost money selling gas.
John Babb, president of J&S Oil, Manchester, Maine, said society has reached a point where cash is no longer king. Credit cards, he said, have become the leading form of payment. And with the price of gasoline escalating, more and more are turning to credit cards for payment. Just this last year, credit card companies made more on a gallon of gas than the retailers did, Babb told the Journal.
He said J&S Oil has tried to design its convenience stores so in-store profitsstore sales that come from drinks and foodoffset the costs lost on the sale of gasoline. He said he does not believe anyone in the industry, at this point, has increased the price of gasoline to cover costs associated with credit card sales. There has been some movement, not so much in this area, but in other parts of the company, where they give [customers] a discount when they pay in cash, he said.
Credit card companies also are limiting how much a customer can pay at the pump, he said. The pump actually shuts down. That is frustrating to customers, said the report, especially SUV owners who want to fill up their 35-gallon gas tanks. MasterCard's pay-at-the-pump limit is $75. Visa and Discovery, limit customers to $50, said Babb.
Joanne Trout of MasterCard told the paper that the cap is to protect merchants and customers from fraudulent transactions. When customers use their credit cards at the pump, the transactions are authorized without knowing the final bill.
[A customer] has to shut down the pump and swipe their card a second time, Babb said. Merchants are then charged a second transaction fee by the [credit card] processors and then the credit card companies charge a percentage rate, which can be between 2% and 4%, and that's where the customer and merchant take a beating. As the price of gas rises, so does the actual cent per gallon they take from us; however, our margin of cents per gallon does not.
Sharon Gamsin, a spokesperson for MasterCard Inc., told the paper that fuel retailers get a huge amount of benefits from using cards. She said credit cards used at the pumps cut down on labor costs. The automated sale reduces the amount of time a cashier has to work the register. Cards also encourage people to fill up, rather than pump round dollar amounts. And they protect retailers from theft. Stations do not have to keep as much cash on hand.
Babb said retailer groups are trying to persuade congressional leaders to look into interchange fees and other credit card company practices.
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