Thursday, August 7, 2008

Cash or credit?

Cash or credit at the pump? It used to happen at fueling stations all the time. Many thought the practice had gone away. But it never really did.

And it’s raised another question in the mind of some truckers. How is it that a station can charge less based on how you pay? To one trucker who called our program, it sounded like a form of price gouging aimed at credit card-using customers.

But in fact, it’s not.

Most of the discount they’re offering for cash payment is due to how the credit card companies make their money. They charge a percentage of the purchase.

I remember it used to be 4 percent of retail purchases. So when you paid a dollar, 4 cents went to Visa, Mastercard or whoever.

Now that a gallon of fuel is more than $4 … that 4 percent becomes 16 cents to Visa, not 4 cents.

I’m not sure 4 percent is still the number, but I’m pretty sure it hasn’t gone down.

Part of what’s driving this as well is the incredibly thin profit margins local fuel stations have on diesel purchases. Some only pull in a few cents per gallon in net profit. So 16 cents off that becomes a make or break situation.

I’m not trying to justify what they’re doing. I don’t think I could look myself in the mirror in the morning if I tried to justify anything fuel companies did right now. But this is why they’re offering that discount.

That being said, I think one more point needs to be made: If you are charging more for credit card purchases, you should have to put the higher price on your sign.

If cash buyers get a discount, bonus! It’s like Christmas.

But no one should ever be subjected to pulling in for one price, only to be charged another when they walk in to pay.