As consumers complain more about rising gasoline prices, petroleum retailers are renewing their own complaints about how credit card interchange fees erode their profits, prompting a new round of industry sniping.
Certain gas-station operators this month jacked up their basic price of gas while touting fat discounts of as much as $2 per gallon for customers paying with cash or its equivalent, including debit cards (
The tactic skirts card networks' rules barring surcharging by exploiting another rule that has existed for years that enables merchants to offer discounts for other forms of payment that until recently few have tapped.
In Suffolk County, N.Y., some gasoline merchants are touting a basic gas price of $6 per gallon, promising a $2 discount for those paying with cash to bring the cost to about $4 per gallon–close to the average local price for gas.
A report the National Association of Convenience Stores published this month alleging card fees are rising faster than gasoline prices may have stoked merchants' bitterness over interchange expenses (
Fuel prices rose 80% between 2004 and 2011, while "card fees," including interchange, rose 180% during the same time period, the organization contends. The convenience-store industry paid $11.1 billion in credit card fees in 2011, "a 23% jump" from the previous year, according to the report.
The Washington D.C.-based Electronic Payments Coalition fired back with a local radio spot that aired during the week of April 16 that called the gas merchants' moves "a shell game." The group represents most of the nation's state banking associations, along with Visa Inc., MasterCard Worldwide, Bank of America Corp., Citigroup Inc., U.S. Bancorp and Wells Fargo & Co.
According to the spot, when merchants sell gas to consumers, "they walk away with a more than $1 billion gift from Congress," alluding to the Durbin amendment within the Dodd-Frank Act that essentially halved the debit card interchange fees merchants pay most issuers effective Oct. 1 last year.
"Senator Durbin and his friends in Congress slashed interchange fees and gave gas stations a more than $1 billion subsidy, ... (and) instead of passing along the savings to us they are keeping the change," the coalition said in its spot.
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