Gas Stations Experiencing Decreased Profits Despite Higher Gas Prices

Gas Stations Experiencing Decreased Profits Despite Higher Gas Prices



Gas Stations Experiencing Decreased Profits - Despite Higher Gas Prices
Higher gasoline prices are not only a​ source of​ constant frustration for consumer wallets, but convenience stores selling gasoline are also finding the higher gasoline prices a​ major challenge .​
Increased gasoline prices do not necessarily mean higher profits for retailers as​ one might think- instead, the higher gas prices result in​ higher costs that actually reduce profit margins for gasoline retailers- particularly due to​ the increase in​ the amount of​ credit card fees paid.
As US gas prices continue to​ steadily climb, more people are choosing to​ pay at​ the pump with credit and debit cards .​
What was once mainly a​ matter of​ convenience for consumers in​ a​ hurry- credit card, debit card and speed pass gasoline payments have become the preferred method of​ payment for gasoline by most consumers .​
This trend for credit or​ debit card payment preference for gasoline purchases was shown in​ a​ February 2018 study conducted by the National Association of​ Convenience Stores, which revealed that in​ the year 2018, credit card fees cost an​ average of​ about $45,785(USD) for convenience stores accepting plastic for gasoline payments .​
In fact, the credit card fees surpassed the average revenues of​ these same stores during the same year- with the average convenience store selling gasoline earning an​ average of​ $42,196 pre-tax revenue in​ 2018.
The majority of​ gas buyers prefer to​ use their debit or​ credit cards to​ fill their gas tanks as​ the price for gasoline increases .​
It could be a​ combination of​ people who just don’t carry much cash on them, or​ because people aren’t willing to​ spend the cash they do have on hand to​ put gas in​ their vehicles! It’s kind of​ psychological, in​ a​ way, and temporarily helps avoid the pain associated with paying more for gasoline since the credit card bill will be delivered later, and the gasoline purchase might not be as​ noticeable when along side the other purchases made during the month!
Additionally, many consumers use a​ credit card to​ make all of​ their monthly expenditures- either for the credit cards rewards program benefits or​ because it’s easier for them to​ make a​ single payment to​ the credit card each month than it​ is​ to​ pay for things individually throughout the month .​
The National Association of​ Convenience Stores indicates that about 65% of​ consumers prefer to​ purchase gasoline with a​ credit card.
It’s estimated that credit card fees cost about 3% of​ a​ transaction, and that percentage includes the interchange, acquiring fees and PIN based debit transaction fees .​
Small convenience stores offering gasoline sales to​ consumers are really hurting from the increasing expense of​ credit card processing fees- mostly due to​ the increase in​ consumers paying with credit.
Some gasoline retailers are considering discount programs for customers who decide to​ pay for their gasoline purchases with cash, to​ help avoid some of​ the rising expenses in​ accepting credit cards as​ payment for these transactions .​
Discount programs will allow for a​ 1 to​ 6 cent decrease on the cost per gallon for gasoline for each customer who pays with cash instead of​ credit or​ debit cards- the discounts will hopefully result in​ a​ decrease use of​ credit cards, and the savings on credit card expenses are then shared with consumers who help the retailers save that money by paying with cash.




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