Pain at the pump

When gas station manager Roger Randolph realized it was costing him money each time someone filled up with $4-a-gallon gas, he hung a sign on his pumps: "No more credit cards."

He may be the first in West Virginia to ban plastic, but gas station operators nationwide are reporting similar woes as higher prices translate into higher credit card fees the managers must pay, squeezing profits at the pump.

"The more they buy, the more we lose," said Randolph, who manages Mr. Ed's Chevron in St. Albans. "Gas prices go up, and our profits go down."

His complaints target the so-called interchange fee - a percentage of the sale price paid to credit card companies on every transaction. The percentage is fixed - usually at just under 2 percent - but the dollar amount of the fee rises with the price of the goods or services.

As gas tops $4 a gallon, that pushes fees toward 10 cents a gallon. Now stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits shrink or even reverse.

In a good month, Randolph's small operation would yield a $60 profit on gasoline sales. But that's been buried as soaring prices forced the station to pay about $500 a month in interchange fees.

"At these prices, people aren't making any money," said Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores. "It's brutal."

Lenard's group reports convenience stores paid roughly $7.6 billion in credit card fees last year, while making $3.4 billion in profits.

The way interchange fees are structured has long annoyed retailers, prompting calls for relief.

Legislation pending in the U.S. House and Senate would allow merchants to bargain collectively with major credit and debit card companies.

The National Retail Federation says gas prices point to the unfairness of the system: Gas stations are paying more in interchange fees because the price of gas has gone up, while the cost of processing credit or debit cards remains the same.

"We have always contended that it doesn't cost Visa and MasterCard any more to process a $1,000 transaction than it does a $100 transaction," said J. Craig Shearman, vice president of government affairs at the retail federation.

The credit card companies say fees are just part of the cost of doing business.

MasterCard has capped interchange fees for gas purchases of $50 or more, said company spokeswoman Sharon Gamsin.

Accepting MasterCard also gives gas stations "increased sales, greater security and convenience, lower labor costs, and speed for their customers at the pump," Gamsin said in an e-mail to The Associated Press.

Visa argues that the fees are offset "by the tangible benefits to stations and their customers, such as the ability to pay at the pump," the company said in a statement to the AP.

Absent congressional action, gas stations are seeking other relief, including discounts to customers who pay in cash.

Around Odessa, only a handful of stations surveyed won't accept plastic, but some had other restrictions on how electronic payments can be used.

At Albertsons convenience store on Eighth Street, customers can only use debit or credit cards at the pump. If they want to pay inside the store with plastic, they can only use a debit card and then only if they buy something else in addition to gas.

Oscar Lee Rubio, a cashier, said 80 percent of the people who come into the store get mad. By early afternoon Friday, Rubio lost at least four customers who chose to go to another gas station because of the policy.

"That's what gets people mad," he said, "because they have to use debit and some of them don't have debit."

Big John's Grocery on Yukon and Alderfer Avenue doesn't allow any type of electronic payment.

John Willard, who owns the store, said some people get irritated when they learn about the policy. It also puts a slight dent in the business.

"It always hurts some. Some people leave," he said.

Love's on Interstate 20 accepts credit cards and debit cards but doesn't accept checks. Even though most people pay by credit card, Love's still gets angry customers.

Liz Rojas, administrative assistant manager, said that truck drivers are especially annoyed with the policy.

Will Benedict and Sonny McLain, drivers for MBM Customized Foodservice Distribution, said they depend on electronic payments. Cash isn't an option for truckers because of the cost of filling up a big rig, and since some places like Love's don't take checks, electronic payments are the only option.

Benedict said anyplace that wouldn't take his card wouldn't get his business.

Many said they prefer using cards at the pump and don't want to have to go inside to pay by cash or check.

"It's ridiculous," Ilda Lujan said of the concept. "It's hard because I have my kids, and I'd rather pay (at the pump)."

But no matter how inconvenient payment policies or high gas prices are, people will still keep coming to gas stations even if it irritates them.

"It's a necessity," said Jesus Moreno, manager of Town and Country on Eighth Street.

The Associated Press and OA staff writer Lyxan Toledanes contributed to this report.