Gas Retailers Feel Pain at the Pump From Credit Card Fees
WASHINGTON, D.C. -- While it is easy to believe that gas retailers are making a profit every time the price at the pump ticks up a few cents, the reality is operators lose money, according to the Merchants Payments Coalition (MPC).
The Oil Price Information Service recently reported gas stations took in 13 cents a gallon in gross profit -- before taxes, payroll and other overhead expenses -- during the first quarter of 2012. However, NACS, the Association for Convenience and Fuels Retailing, puts the cost of selling gas around 15 cents a gallon. As a result, gas retailers lost approximately 2 cents per gallon during the same time period, according to the coalition.
Factor in a 7-to 10-cent per gallon swipe fee every time a motorist pays for gas with a credit card, and banks are taking in a bigger piece of what drivers pay for a gallon of gas, the group added.
"To deflect attention from this, banks are misleading the public about their hidden credit and debit card swipe fees in a new advertising campaign. They want to convince the public that gas stations are sitting on a windfall when, in fact, many didn't even turn a profit last quarter in this hyper-competitive business," said Lyle Beckwith, senior vice president of government relations at NACS, an MPC member.
"The facts are there are no facts to justify credit card swipe fees that are fixed in secret, without competition, and which continue to rise," he added.
Swipe fees have been a hot-button issue in the industry for several years. In October, new Federal Reserve regulations capping the fees charged on debit cards went into effect -- after a months-long bruising battle between the retail industry and banking community. However, the new caps did not apply to credit card fees. According to the coalition, savings from lower debit card fees realized by retailers have been at least partially offset by rising credit card swipe fees imposed by the card industry.
Gas retailers' second-highest cost after labor is now the swipe fees they must pay to Visa, MasterCard and the nation's banks, which take $2 out of every $100 spent by consumers on credit cards. While the price of gasoline went up 80 percent between 2004 and 2011, card fees have increased 180 percent -- even though the cost of providing the actual "swipe" electronic transaction has been going down, according to NACS.