Gasoline Retailers Say Credit Card ‘Swipe Fees’ Fuel Higher Prices

Published June 28, 2012

A growing practice among gasoline retailers is to offer cash and higher credit card prices to combat increasing numbers of card users, rising gas prices and high “swipe fees,” transaction fees set by credit card networks for banks.

Although credit card prices may differ from cash prices as much as 5 cents a gallon, gas merchants are “within the law,” said Joe Shapiro, a spokesman with the Maryland comptroller’s office, which regulates gas stations.

“The legal requirement is to advertise the lowest price for regular gas,” Shapiro said. He said the comptroller’s office has not received many complaints about the practice.

Some consumers, however, say they feel deceived.

Eli Bergman, 18, of Rockville, Maryland, said, “I feel like the (gas merchants) are tricking me. The signs are misleading. I’ve driven up to the pump thinking I was paying one price and ended up paying significantly more.”

Gas retailers, though, say that they’re put in a tough situation.

“In our business I think the unfortunate thing is that you have to put the price out for everybody in the world to see on the street, all your competitors see it, all the consumers see it. So when they see a lower price, their first reaction is I want that price,” said Peter Horrigan, president of the Mid-Atlantic Petroleum Distributors’ Association.

More Credit Cards, Less Profit

“It used to be that about 60 percent of sales were credit card (transactions),” Horrigan said. “Now about 85 percent of purchases are on a credit card because consumers don’t have enough cash in their pockets to pay the cost of a fill-up.”

Those transactions add up. Two cents on every dollar’s worth of gasolinen pumped at even $3 per gallon is 6 cents the retailer is paying in swipe fees, up to half of a station owner’s profit in a “very good” market, Horrigan said. In some cases, swipe fees are as high as 3 cents a gallon.

“When you look at the fact gas was close to $4 a gallon, you can see that the dealer’s profit margin is very, very small.”

Card Fees Exceed Profits

According to an April report by the National Association of Convenience Stores, convenience stores sell more than 80 percent of U.S. motor fuels amounting to $486 billion in fuel sales in 2011. The industry paid $11 billion in debit and credit card swipe fees, up 23 percent from 2010.

“Card fees exceeded industry profits for the sixth straight year and were 87 percent higher than store profits,” the report said.

Swipe fees are the second-highest operating expense for convenience stores, topped only by the costs of labor, according to the U.S. Energy Information Administration.

Banks argue swipe fees are a cost of doing business that provides a convenience to the retailers.

Dana Amihere ([email protected]) is a reporter for, where a version of this article first appeared. Used with permission.