CH 12.3: Gas Stations Say 'no' to Credit Card Fees

Summary

During a deep economic recession in the U.S., the majority of of businesses are going through hard times. Therefore, some businesses turn to cash discounts for some releif. That is exactly the case for Roger Randolph, a gas station manager in West Virginia. What resulted in his decision to offer cash discounts up to 10 cent per gallon are the ridiculous high credit card fees also called interchange fees, which gets as high as 10 cents a gallon. Gas stations in South Carolina, Georgia, Maryland, New Jersey and Arizona are some other gas stations that are following this trend as well. With the interchange fees, most small gas stations are barely making money. Randolph says that he has to pay approximately $500 of credit card fees per month. "It's brutal," is how Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores, describes it. Last year, convenience stores paid a total of approximately $7.6 billion in interchange fees.


Connection

The connection of this article is to chapter 12.3's cash discounts. Many businesses may offer cash discounts. By offering cash dicounts, the business will stimulate more cash flow and avoid the interchage fees. Customers will also appreciate the cash discounts.


Reflection

In my opinion, offering cash discounts to have more cash in hand as well as increasing cash flows, which is especially beneficial for small businesses. Many large businesses offer cash discounts as well. Regarding the cash discounts of the gas stations, I am not sure if it will benefit much. Mainly because I do not think many drivers that go fill up for gas will be carrying enough cash on hand to pay for the gas. Especially with the high gas prices, I think most people will continue to pay with credit card for their vehicle's gas fill ups. And for the gas station that ban credit cards, they might risk losing customers.

Source

http://autos.yahoo.com/articles/autos_content_landing_pages/587/credit-card-fees-some-gas-stations-say