KNOXVILLE, Tenn. -- Pilot Travel Centers LLC is the latest truckstop chain to stop accepting Visa and MasterCard at the pump, reported Land Line magazine.
The policy applies only to over-the-road truck diesel, the company told CSP Daily News.
The change was made so Pilot could stop hemorrhaging significant quarterly losses due to chargebacks, Mitch Steenrod, senior vice president and CFO for the Knoxville, Tenn.-based Pilot, told Land Line.
Chargebacks are a credit card process by which credit card banks [image-nocss] bill merchants after a cardholder claims either fraud or incorrect charges, said the New York State Department of Taxation & Finance. Chargebacks are used when credit card fraud occurs, and occasionally during friendly fraud, when a consumer uses their card but reports it as a fraudulent charge.
If a customer uses a credit card and disputes the charge or the amount charged, Pilot has little evidence to fight a bill from the card company, Steenrod said. If it's done at the pump terminal, I can't prove it because I don't have a signature, so there's no way to stop it, he told the magazine.
He said Visa and MasterCard enter into contracts with merchants and have operating rules that the card companies can change, which can make it difficult for merchants to navigate. [The media] would like to hammer on Pilot for not taking these cards, but it isn't us, Steenrod added. The credit card companies give you rules you've got to follow, operating rules, and they've got the latitude to financially force you to follow the operating rules. That's why we have to do what we're doing.
Flying J drew fire from trucking customers in May after announcing its ban on Visa cards at its truck pumps, said the report.
Retailers have long battled interchange fees, in which the credit card companies charge merchants an average of 2% of the cost of every purchase for processing the transaction.
Steenrod said interchange fees meant nothing compared to chargebacks. We all know what we're getting into with the interchange feeswhat we don't know is how much in return charges we're getting, he said. That's what's precipitated everybody to shut it down.
With nearly 300 U.S. retail locations, Pilot brought in $11.8 billion in revenue during 2006 for co-owners Pilot Corp. and Marathon Petroleum Co.
Steenrod said Pilot officials are preparing to unveil an alternative solution for truckers to pay at the pump in the next issue of Challenge, the company's magazine. Until then, Steenrod acknowledged that drivers will probably be frustrated by an inability to pay at the pump with Visa or MasterCard, two cards that reportedly control 80% of the credit card market, according to Land Line, citing Progressive Grocer magazine.
They're mad and they should be, Steenrod said. I've talked to Visa and explained to them that while you think you're penalizing the merchant you're really penalizing the customer. Now, their transaction is significantly delayed, and they're infuriated. In reality, the credit card companies are doing a disservice to the consumer.
The companies have typically allowed only $50 and $75 prepay amounts for diesel fuel, which suggests Visa and MasterCard know little about customers filling up big rigs, Steenrod said.
We've incurred significant penalties for letting it go on, he added. It's kind of a one-way street when it comes to credit cards, and [with] Visa and Mastercardit's on the verge of being malicious. This has nothing to do with us not wanting the business We tried to grit through it, and we couldn't. In the last three months, it has taken me 260,000 fuelingsnot gallons but fuelingsto cover what we've lost in credit card activity.
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