The credit card rip off
xBy Dale H Mader
The cashless society we now live in does make it very convenient for consumers to purchase just about anything they wish, simply by signing their name to a little piece of paper. Today credit cards, debit cards, prepayment cards and smart cards etc., are so widely in use that people who pay cash for their purchases are very much in the minority.
Many gasoline retailers for example, find that credit card sales range from 70 to 80 percent of their total sales. As independent automotive business owners in Atlantic Canada well know, they are hit with a huge fee every time a customer pays with a credit card.
These fees were first imposed on retail gasoline dealers by their oil company suppliers less than twenty-five years ago, and yet today they are single-handedly responsible for sending hundreds of small independent businesses in Atlantic Canada straight into bankruptcy.
While the Visa, MasterCard, Discover and American Express member banks and the integrated oil companies reap $ billions each year in surcharges and interchange fees, merchants have no option but to accept credit card payments from consumers and then pay a two percent or more surcharge on the total amount of the bill.
To add insult to injury, small independent retailers are not allowed to recover the cost of the credit card fee from the consumer, Credit card fees are therefore, a significant direct hit on the retailer’s bottom line.
What is particularly difficult for retail gasoline dealers is the fact that pump prices today are more than double what they were just a few years ago. And with all of the international trouble spots and the ever-increasing worldwide demand for energy, it doesn’t appear that pump prices are going to go down significantly anytime soon.
With gasoline pump prices in Atlantic Canada now hovering around $1.16 per litre, that means it costs the retailer about 2.3 cents per litre on every litre of gas he/she sells paid for by credit card.
You don’t have to be a mathematical genius to realize that when you lose 2.3 c.p.l. out of regulated minimum margins of 4 or 5 c.p.l., you don’t have a hell of a lot left to run a business.
Dale H Mader
You can contact Dale here.