The Merchants Payments Coalition (MPC) is once again spreading the word that high interchange fees are causing gas and convenience store owners to suffer, on top of record-shattering gas prices that have already prompted consumers to cut their gas consumption.
In a press release issued Monday, the MPC says that banks are taking seven to ten cents per gallon on each fill-up that gas station customers make. The so-called “swipe fee” – actually called an interchange fee – of two to three percent of each purchase, taken by credit card companies, is taken directly out of the pockets of retailers, to hear them tell it. They allege that banks increase their profit margin every time gas prices increase, and that the interchange fees are “hidden” and that banks are “misleading the public.”
Inconvenient Times for Convenience Stores
No one disputes the fact that gas station owners are having a hard time these days. In fact, the Oil Price Information Service reports that while gas station owners made 13 cents per gallon in gross profit in the first quarter of 2012, the National Association of Convenience Stores estimates that with overhead costs figured in, the cost of selling gas was about 15 cents per gallon during that same time period. According to that data, gas station owners lost about two cents per gallon last quarter.
Robert Fisher, the co-owner of four Chevron stations in Arizona, Washington State, and Oregon said, “There have been times in the past month when I’ve been losing money for every gallon of gas I sell. It`s a very tough industry.”
Gas station owners say that their second-highest cost besides labor is the interchange fee that they pay to Visa, MasterCard, and other banks. The press release from the MPC calls the fee a “cash cow” for credit card companies and banks, and accuses them of price-fixing. They further point out that between 2004 and 2011, gas prices rose 80 percent and card fees have gone up 180 percent – though it’s unclear where the MPC gets those numbers.
MasterCard Takes a Shot at Merchants
Meanwhile, as we reported earlier this month, MasterCard at least has capped their interchange fees since 2007. Craig Vosburg, an executive in the Market Development department at MasterCard, stressed that interchange is free on gas purchases over $50 and has been for nearly five years. He put the onus back on gas station owners, saying that merchants should encourage customers to pay by other methods than credit cards if interchange fees are really putting such a huge burden on their businesses. According to Vosberg, retailers “retain the ability to offer their customers a discount when paying for their fill-up in cash or any other payment method,” suggesting that a cash-only gas station might make a better profit.
Consumers Reap Rewards with Credit Cards
That seems unlikely, given that most drivers prefer to pay at the pump with their credit cards. In addition to the convenience factor, more and more credit card holders use gas rewards credit cards to get some money back at the pump. A person who has gone to great lengths to find the best cash back gas credit card is unlikely to want to pay for gas by cash or check.
This latest round seems like more backbiting and infighting among businesses competing for a piece of the pie as gas prices approach $5 a gallon. With road-trip season right around the corner, the gas-price battle is likely to rage on, as gas prices rise along with the temperature.