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Table of Contents

Lead Story

Canadian payments revolution - eh!

Adam Atlas
Attorney at Law

News

Industry Update

HR 5546 is in the House

Shopit starts Revolution

Agreement keeps Frontier flying

PCI SSC adds new payment device types

New webinars target PCI education

Gas stations nixing plastic

Approaching a crossroads

Patti Murphy
The Takoma Group

Features

Brewer taps payments market

Brewer taps payments market

ISOMetrics:
Payments in the Great White North

Views

Approaching a crossroads

Patti Murphy
The Takoma Group

Education

Street SmartsSM:
Passing the so-what test

Jason Felts
Advanced Merchant Services

Communication matters

Vicki M. Daughdrill
Small Business Resources LLC

How sellers blow deals

Lane Gordon
MerchantPortfolios.com

Canada goes to chip, fraudsters move south: Are you ready?

Deana Sellens
Take Charge Business Consulting LLC

Web sites that work

Nancy Drexler
SignaPay Ltd

Dial is yesterday's paper

Dale S. Laszig
DSL Direct LLC

Company Profile

RDM Corp.

Smart Circle International

New Products

Destroy the data, recycle the rest

D3eraSE
Company: Digital Data Destruction Services Inc.

Inspiration

Take new trip in downturn

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

July 28, 2008  •  Issue 08:07:02

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Gas stations nixing plastic

Reacting to rising gas prices and corresponding interchange fees, a number of petroleum merchants have started taking only cash for gasoline purchases.

When Roger Randolph came to believe it was costing him money each time a customer filled a tank with $4-per-gallon gas and paid for it with a credit or debit card, he banned plastic at his establishment. "The more [consumers] buy, the more we lose," said Randolph, Manager of Mr. Ed's Chevron in St. Albans, W.Va. "Gas prices go up, and our profits go down."

While Randolph may be one of the first in the nation to ban credit and debit cards, station operators across the country are reporting similar woes as higher gas prices mean higher interchange fees the merchants must pay. The interchange rate is tied to the amount of each purchase, so the amount of the fee rises with the price of the product.

Other factors fueling crisis

The National Retail Federation said current events in the petroleum sector point to the unfairness of the interchange system overall. Tom Burns, Senior Vice President of Orion Payment Systems, disagreed. "It is important to realize that the merchant has not been educated on this," he said. "They look at their statements and cry doom and gloom because they see interchange as taking 1.7 percent of their profits on every transaction.

"What they are not seeing is how much the oil company is taking from receipts and putting that toward the purchase of more product to put in the ground, or how much they are charging to lease the equipment. Add to that, merchants are paying 20 percent of their profit on taxes ... so they're getting clobbered by a lot of other factors beside interchange."

So, station owners are seeking other ways to generate profits. "The motivation for cash-only is that it forces you to come inside, where you are more apt to do a point of purchase sale for [nonfuel] items, rather than paying with a card at the pump and taking off," said Paul J. Citarella, Senior Vice President of Sales and Marketing for Fleet Cards USA.

Perhaps to mollify merchants, Visa Inc. said it will simplify its fee structure and thereby lower fees for card sales at the pump. MasterCard Worldwide made a similar move two years ago. But Jeff Lenard, spokesman for the National Association of Convenience Stores, said these actions do little to ease gas station owners' financial distress, and the underlying problem is Visa and MasterCard have too much power in setting interchange rates.

The card brands and others in the payments industry believe interchange is just part of the cost of doing business. According to Citarella, the best way to combat increased fees at the pump is to establish tighter controls over expenditures; he believes assisting merchants with this is a niche market for ISOs and merchant level salespeople.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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North American Bancard | Harbortouch | USAePay | IRISCRM.COM | Humboldt Merchant Services