Charging gas brings additional charge; Pumps show different prices for cash, credit
In the April 1, 2008 edition, Times-Picayune, Money Section, Page 1.
By Stephanie Brown
New Orleans - As the cost of gasoline continues to rise, more gas stations struggling to make a profit are charging different prices for customers who pay with credit than those who pay with cash.
According to the Petroleum Marketers Association of America, representing some 8,000 petroleum retailers nationwide, the practice is becoming increasingly common.
While legal, some customers, like Bill Bertenshaw of Clayton, N.J., are surprised to find they're being charged more.
Bertenshaw said he was on his way home from work recently when he stopped at a Gulf gas station.
When he looked at his credit card receipt after gassing up, he noticed the station charged him $3.07 per gallon for regular gas. Bertenshaw said that rate was 10 cents more per gallon than what he thought it should be.
"I asked the guy about it, and he pointed to gas pump," Bertenshaw said. "They have a double set of numbers, a cash price and a credit price."
Bertenshaw said he believed charging more for credit card purchases was illegal.
"Ten cents is an awfully big spread," he said. "It's not like it's a couple cents -- and there's no warning."
Harold Spence, director of the county Department of Consumer Protection and Weights and Measures, said charging separate prices for cash and credit cards is legal as long as the two different prices are posted on both the street sign and at the pump.
"As long as it's posted and the public has that knowledge, it's fine," he said.
The Gulf manager Imram Manny Rahim said the station does advertise on both its street and pump signs.
He said the station has been charging a different price for a little more than a month for customers who pay with credit.
The reason, he said, is the station is struggling to pay the credit card transaction fees charged by companies such as Visa and MasterCard.
The transaction fees range from about 2 percent to 5 percent, he said.
That can be especially burdensome on a gas station, like Gulf, which is making an average of three to six cents profit per gallon.
"The credit card fee is killing us," he said.
Rahim said about five years ago, gas stations were making 20 cents profit per gallon and could afford the fee. But now at least for Gulf, which Rahim said didn't even make a profit last month, it makes good business sense to pass that fee along to the consumer.
Gulf owner Balkar Saini added that larger gas companies, like Sunoco or Wawa, have convenience stores that add to the revenue.
"We have to make money on gas to pay the bills," he said.
Brandon Wright, spokesman for the petroleum manufacturers group, said, "These guys are looking for any opportunity to increase revenue. It's a tight business."
Wright said credit card companies such as Visa and MasterCard monopolize the fees they charge for transactions.
"They say this is how it is, take it or leave it," he said. "And obviously you have to take it. There are very few places that will not accept a credit card."
A bill introduced to Congress last month called the Credit Card Fair Fee Act would amend the anti-trust laws to ensure competitive market-based rates and terms for merchants' access to electronic payment systems.
The legislation has been referred to the House Committee on the Judiciary for review.
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