Thoughts and Riches

.....a blog about personal finance, motivational stories, deals, and special offers

Web Domain Registration
Go Daddy $12.99 Turbo SSL Sale!
Get Started Now
Thursday, June 26, 2008
Pay cash, save money
With gas prices soaring, some gas stations are trying to ease the pain by offering discounts for cash payments instead of credit card. Why? Because merchants have to pay a lot in fees when customers pay by credit cards.
The difference speaks to a relatively obscure aspect of credit finance called interchange fees. Those are the fees (usually slightly under 2% of a purchase) that the merchant must pay the credit-card issuer. As gas prices skyrocketed, the money paid to card issuers ballooned as well. Today, the fees amount to 9¢ to 12¢ a gallon. That, coupled with a sharp rise in the number of people who use cards at convenient pay-at-the-pump machines, squeezed Flash Foods' profit margins. Those margins have fallen to an estimated 4¢ to 7¢ per gallon. To put the increase in perspective, consider that in 2004 Flash Foods paid $4 million in credit-card fees, but this year it estimates it will pay $14 million.
Like customers, gas stations are also getting squeezed by rising gas prices which have further reduced their margins when customers use credit cards.
Gas retailers say that $136-a-barrel oil isn't the only factor driving up costs at the pump. Card companies have long charged interchange fees, but as credit-card use soars, the total cost of interchange fees has risen drastically. About 60% of gas purchases were made with a card last year. While the National Association of Convenience Stores (NACS) doesn't have comparable earlier data for gas purchases, the share of all convenience store purchases made with a card has risen from 32% in 2003 to 56% today.
I sympthatize with the gas stations and will consider paying by cash if the discount is good. Otherwise, I prefer paying by credit card as I can pay at the pump, don't have to worry about carrying cash, and at the same time, I can earn rewards on my credit card.

BusinessWeek: To Save Money at the Gas Pump, Pay Cash


posted by Ruby @ 8:24 AM  
Post a Comment
<< Home

See important Disclosure and Disclaimer

Favorite Quote
"If you look at what you have in life, you will always have more. If you look at what you do not have in life, you will never have enough".
                - Author Unknown
This site uses cookies from companies like Google and others to enable the companies to deliver their services, personalize their ads and product offerings, and for traffic analysis. Information about your use of this site is shared with these companies. By using this site, you agree to its use of cookies. Additionally, this site, including blog posts, may contain reviews, links, banners, text and other forms of advertisements for products, services, courses, and so forth of companies of which we may be an affiliate member or for which we may get paid for referrals. This site may also contain blog posts for which we are paid, as well as blog posts regarding products or services of companies from which we may have received complimentary products or services.
Reward Surveys/Panels/Shopping/Contests
Kellogg's Coupon Newsletter - Take Control of Your Money
Protect Your Computer Files
Job Search site
Indeed Jobs
Yahoo! HotJobs - Job Postings
Credit Cards
Best Western Canada Credit Card - 20,000 rewards points: Apply Now!
Apply Now!
Health: eHealthInsurance
Phone Service
Investing 120x120 Best Seller Giveaway
Find the perfect babysitter at
Previous Posts
Favorite Charities
Disclaimers, Privacy Policy, and Disclosures
  • Disclaimer, Privacy Policy, and Disclosures

  • Third-Party Offer Disclaimer
  • Subscribe to Blog Posts
    Add to Google Reader or 

    Bookmark this blog site
    Contact Me


    Web Site Link Exchange

    Link Exchange

    © Thoughts And Riches proudly powered by Blogger.