Credit Cards Give Double Rewards for Gas Purchases

As if they are not taking enough money out of the pockets of retailers, credit-card companies are offering consumers double rewards for purchases at gas stations and more!

I opened my Optimum Online e-mail today to find a message from my Sony Rewards Visa card, offering me double points for each dollar I spend over $250 each month at restaurants, gas stations, hotels and airlines. The offer is for all of October, November and December. And this isn't the first time I've received such an e-mail.

Now, as a consumer, I think, cool! With gas prices so high, and the lunch prices in Manhattan, I can reach $250 in gas and dining in no time. But putting on my retailer hat, I think, good God, are they not taking enough...now they have to ENCOURAGE people to use their Visa cards at gas stations and restaurants?! With all the work the convenience store industry is doing to fight both Visa and MasterCard, it seems like a slap in the face to me!

Did anyone else get this type of e-mail or hear about it?What are you doing about it?

Are you increasing proprietary debit card rewards during this time-period or countering these offers in any way?

Comments

[Larry Bowling]

The time and money that NACS is spending on the credit card fee issue may very well be all for nothing. What our industry needs to learn is how to market fuel to actually make a profit. We allow the credit card companies and the government to make many times over what we make on a gallon of fuel. If we would wise up and add credit card fees to the cost of fuel, the street price would go up immediately. NACS should spend more time developing seminars that teach people how to market fuel correctly.

[john clark]

some times i feel purty good when i can gather a 35 to 40%margin on a pop and candy bar sale. now enter payment with a credit card or debit card, which is becomming more and more a prefered method of payment. cost of candy bar and pop = 1.25 retail 2.10 = 40% margin. cost of credit transaction .67 (average cost of transaction) now the margin is 9% or i get to take 18 cents instead of .85 cents to the bank. i should have started a credit card company.

[Mehgan]

I agree with you about starting a credit-card comapny john!

It seems that all retailers are facing credit-card fee issues. But has anyone found a way to lessen the affects? I'm sure everyone would like to know some tips.

[john clark]

SO what about this for tip. there is a convience and a value to both the retailer and consumer when using plastic as a method of payment. why not share the expence. i do here some are doing it or setting some kind of minimim purchase using plastic. what do you think of that mehgan?

[Mehgan]

I have experiences with a number of small retailers and minimum purchases, and they tend to work one or two ways, both of which I have experienced recently:

A deli/c-store near my office posts a $5 minimum on credit/debit purchases. But there have been a number of times when my lunch purchase amounts to less than the minimum. Fortunately for me, the kind cashier allows me to pay with my debit card anyway. Although I do feel bad every time I do it, and wonder what good the sign is if every customer gets the same treatment.

And secondly, while a small c-store in the train station along my commute does not post a minimum purchase sign, they strictly enforce it. I wanted water and a snack, but I was told the minimum purchase was $10 for credit/debit. Now I understand the purpose, but I wasn't about to pick up more things just to reach the minimum, and left slightly upset, and thirsty.

From a retailer standpoint, I completely understand the purpose and goal of a minimum purchase amount. But when it’s not enforced, or communicated, it does the retailer no good -- customers will use their plastic for purchases, or walk away if they can't, possibly with a negative experience.

On another note: What about offering discounts for cash transactions?

[john clark]

mehgan, you understan that there is a cost for plastic. i do not want to force an amount of purchase, i want to make the sale which brings satisfaction to both of us. what if i asked you to share in the expence of using plastic. say that i have a 50 cent card charge. you get your water and snack i get the sale we (you, i and the card processer) are all happy.

[Mehgan]

Well, half a dollar for a bottle of water may be a lot for some people. If you were to do something like that, I'm sure it would need to be clearly posted and communicated to the customer. More so than just a cardboard sign taped to the register.

However, I can not say whether or not that is even legal. I haven't seen the details of credit card contracts, or heard of the idea. Has anyone else out there heard of or tried this?

[Mark Button]

This is what I am doing to combat the credit card fees. First off, I DO impose a $5.00 minimum. And I tell the customers why. IF I sell something for under $5.00, depending on what it is, I could actually LOSE money. So they now understand. (mostly)

AND...I tried the "cash discount" for gas...it was totally unexpected results! I have about 28% of my customers paying for their gas with cash already. So, what I did was try to figure out what percentage discount I could give for a cash purchase. I came up with a 5 cent discount for cash. What happened was that the 72% of the people that were already using credit cards, only 15% of them went to using cash instead. The problem was is that I already had 25% of the people using cash, so they got 5 cents off too. So the net result was a loss. 5 cents a gallon (at a current cost per gallon of $3.21) is about 1.5%. The C.C> companies are charging 1.67% PLUS the transaction fee...

Think long and hard before you start offering cash discounts---it was hard to get out of it once started.

I have repeatedly wrote my congressman and senators about the exhorbitant C.C> fees, please do that---because they have a bill coming up next year (fall---2008) dealing with that exact issue.

Mark

[john clark]

The question continues Dear Jennifer,
about the 18 cent per transaction charge on top of the 55 cent interlink and other debit charge making a cost of 73 cents per debit transaction. Due to Circumstances many of our transactions are less than $5.00. A five dollar at 30% margin gives us a profit of 1.50 and thee card cost is almost half of that. If the sale is less than 3.00 the card cost takes all of the profit. We make .75 cents profit on a pack of cigarettes and you can see where that goes. Sometimes a bottle of water and candy bar would be the sale and I could go on and on. What can be done about this? The .18 cent extra charge started about a year ago. Before this charge the cost per transaction although high, was acceptable. How did this extra charge come about?
Thanks for your help in this matter. John clark

mark and mehgan this is a copy of a letter i receintly sent to my credit processer. am waiting for the answer. this whole situation is only going to get more expensive as time goes on. what is every one else doing about it. mark which cngressman and senators did you send comments to? john c

[john clark]

so this is the end of conversation on credit card fees? we all had better get ready for more. government agencies are now putting peoples money into debit and credit accounts. so the use of plastic will become more wide spread with someone in the middle taking a piece of our pie and there is nothing we can do about it?