Credit card fees, who really pays for them? All those ads for rewards cards and special treatment for “members” isn’t free. As a business owner you can pay as much as $2.00 +1.75% of any transaction with a MasterCard or Visa, up to 2.75% more for American Express. Thats why lots of small businesses won’t take AMEX.
Those rewards programs cost money and someone has to pay. This creative Mobil gas station in a SoCal Beach Street News Zone has figured out how to get people to quit using their credit cards. The big question is, how much business are they losing with a 80 cent markup per gallon for using your credit card for Diesel. That is almost a 27% markup! Not a bad gig if you can get it, but is it price gouging?
Most credit card companies don’t allow a small business to have a different cash/credit price. At least they can’t advertise it without risking their merchant account to take credit cards. For many small businesses this can be more than half of the money that comes in the store. Those fees can add up to hundreds or even thousands of dollars every month that comes out of the profit of the store.
When ARCO stopped taking credit cards it changed the game for gas stations. Lower prices brought in a lot of cash customers, I was an ARCO customer for many years myself. Since the gas is just the lead in for the items inside with “convenience store” pricing, that meant more profitable gas stations. Now it is common again to see Cash/Credit pricing at gas stations all around SoCal. With nearly zero profit and high risk selling gas, it makes sense. In Europe regulators hide the high taxes and fees with “one price” labels. The price you see is the price you pay.
Buy an airline ticket and the bill at the end can be way higher after a laundry list of taxes and fees are added. Gas pumps show the final price taxes included. Some gas pumps will have a decal that lists the taxes but who really reads those? Your local department store adds only sales tax at checkout, but they don’t tell you how much is state, county, or local tax do they. Just in California there are a dozen different sales taxes.
For the small business, they have to save the money and pay the taxes each week or month depending on how much volume they sell. The credit card companies skim their fees off first and hold the money for several days. If you buy a $500 Suit with your rewards card, the store might get $468 in their account a week later. It is a tough way to do business.
Should all small businesses stand up and do like the gas stations?