Jun 5, 2006

Cash discounts at US gas station cause card usage to plummet

USA Today reports that gas stations are once again offering discounts to drivers who pay cash. Pretty much the same thing as a credit card surcharge. One retailer describes how only 18% of customers are now paying with credit cards, down from 60% to 70% before the retailer started offering a discount on cash purchases. Plus, sales inside the store of chips, candy, soft drinks and other items have also risen as more people are coming into the store to pay rather than inserting credit cards at the pump. What a fantastic added benefit! Every convenience store owner is dying to get people to buy more stuff in the store!

"Retailers are doing anything they can to try to figure out how to reduce their credit card expenses," National Association of Convenience Stores spokesman Jeff Lenard says. Although there are no official statistics, Lenard says more stations are offering cash discounts than in recent years. He notes some stations are even refusing to accept credit cards.

US retailers are not usually able to add a credit card surcharge, but they have been allowed to offer a cash discount since 1975. By the mid-80's most merchants had decided not to discriminate against card paying customers, probably judging that it wasn't worth risking a negative reaction. Today the market appears to be different, and merchants seem more willing to encourage cash over cards. What has changed? That's a topic for another blog post. A long one on credit card surcharges around the world. I hope to have it done by the end of this week.

No comments: