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Gas rewards card swipe fees challenged

By , CardRatings contributor
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Gas rewards card swipe fees challenged

Credit card interchange fees cost Americans roughly 7 cents per gallon of gas in March, according to a new report published by NACS, a trade association for convenience and fuel retailing. The NACS report called credit card swipe fees a convenience retailer's largest operating expense after labor. A typical gas station, according to the report, will spend more on payment processing than on rent or utilities this year. Historically, the report indicates, swipe fees have risen faster than inflation or the price of gas.

The NACS report claims that Visa and MasterCard privately fix fees for merchant banks, a practice gas station owners call anti-competitive. According to the report, American Express' opposition of a Justice Department settlement with Visa and MasterCard poses a threat to retailers' attempts to encourage less expensive forms of payment. For years, merchant agreements prohibited "steering," a practice that rewarded customers for choosing a debit or credit card with a lower swipe fee.

Gas credit cards can offset high swipe fees

NACS projects that if gas prices reach $4.50 per gallon, consumers will pay an average of about 8 cents per gallon in credit card fees. According to a NACS consumer survey, nearly 3 out of 4 Americans would drive an extra 5 minutes out of their way to save 5 cents per gallon on gas. Roughly half the respondents would drive 10 minutes for the same nickel per gallon.

However, a gas credit card with an automatic cash rebate can offset most, if not all of that expense. Some cards pay up to 5 percent cash back on vehicle fuel purchases made at the pump at free-standing filling stations.

NACS was originally founded as the National Association of Convenience Stores. Its membership includes more than 3,700 companies representing both suppliers and retailers, with 70 percent of member companies operating 10 or fewer locations.

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