Green Livin High Prices Cause Drivers to Hit Credit Card Cutoffs
Green livin the pump slowed and cut off Brendan Baker's gasoline purchase at $74. He returned the nozzle to the pump, swiped his credit card a second time, then put the nozzle back in his 2000 Dodge Ram 1500 and continued fueling. He finished pumping and looked at his two receipts, which totaled $95.23.
"Normally I don't keep them because they remind me how much money I wasted," said Baker, a computer technician refueling at his local Sunoco station in Centreville.
With skyrocketing gas prices, many customers are bumping up against pay-at-the-pump credit card limits -- often $75. Rules limiting these transactions are nothing new, but with gas prices exceeding $4 per gallon, it's increasingly easy to exceed the limit, leaving many customers to face the hassle of dealing with two-transaction purchases.
At the station where Baker was filling up, 30 to 50 cars out of a total of about 900 hit the limit each day, according to the station owner. On a recent Saturday afternoon, the station bustled with Toyota 4Runners, Tacomas and other fuel-thirsty vehicles.
Back in 2003, when Jeff Urban bought his Hummer, paying $75 to fill up would have been unthinkable. But now, Urban joked, his goliath SUV will soon be a three-transaction vehicle.
Getting cut off mid fill-up is "a pain," Urban said after fueling. "Especially in Northern Virginia, where it's a go-go-go lifestyle, it's an extra couple of minutes out of the day that frustrates you."
Customers who pay inside stations can still use their credit cards like anywhere else and face no limit.
But at the pump, the size of credit card purchases has been limited largely to protect gas stations, which can be charged if there's a problem with the transactions. Purchases at the pump are particularly vulnerable to trouble since no signature is required to verify the user's identity. And since the credit card is swiped before the gas is pumped, there's no way to know the size of the purchase when it's authorized.
Visa, MasterCard and Discover Card generally guarantee that merchants will be paid the first $75 of a pay-at-the-pump transaction. American Express determines its limits based on the contractual relationship with the companies. But beyond those levels, gas stations are more likely to foot the bill in what are called charge backs if a transaction is bad.
Gas station owners and managers say they are already hard-pressed to hand more money back to credit card issuers. The high price of gasoline has left many stations in a financial fix. They've squeezed their average markup to remain competitive and the interchange fees they pay to credit card issuers, which rise with the sale price, are up.
The average station makes a profit of $60 at the pump per day, says Jeff Lenard, a spokesman for the National Association of Convenience Stores. "It's not uncommon to lose money selling gas. So the idea of losing $20 or $50 [in charge backs] is too much."
Visa recently amended its rules to make it less risky for stations to increase the limit on pay-at-the-pump sales. Until April 2007, merchants could be charged the entire amount of any bad purchase over $50. That month, Visa changed its rules so that merchants were liable only for the amount of the purchase that exceeded $50. In April of this year, Visa increased the limit to $75.
Discover has also increased its limit to $75 from $50. MasterCard has had a $75 limit for several years.
Stations "are faced with two bad options -- allow the pump to go beyond $75 and risk not getting paid . . . or take a customer from frustrated [with gas prices] to outright anger," Lenard said.
Even when station owners want to take on more risk, limits are generally set by the oil companies rather than by the stations themselves. Sunoco limits the transactions to $75 if customers are using Visa or MasterCard. Chevron and Exxon Mobil's limits are either $75 or $100, depending on the credit card used. East of the Rocky Mountains, BP sets a pay-at-the-pump limit of $100, although a spokesman said some stations may choose to set higher limits.
In response to complaints over the payment restrictions, a few individually owned stations have increased their limits.
Gezahegne Daba, manager of a Hess station on the corner of New York and Montana avenues in Northeast Washington, said his station recently raised the pay-at-the-pump limit to $100 after a rash of consumer complaints.
Across the street, Thomas Goode paid an additional 2 cents per gallon to fill up the Chevy Astro van he used for work at a Shell station. A few months earlier, he had been using the Hess station, but it would cut him off at $50. After stopping at Shell one day, he discovered the station had a higher limit for his corporate card. "After I pumped the gas and I found out there wasn't a $50 limit on it, I just kept" going there, he said.
A Gaithersburg Liberty station recently negotiated to increase its limits to $75 from $50, though some cards still cut off at $50. The station also offers customers a 5-cent per gallon discount if they pay cash.
Many customers are taking the deal.
"I used to fill up with a credit card, but now I fill up with cash because it's cheaper," said Kevork Araklian, who said he expected his weekly gas bill for his 1998 Chevrolet Tahoe to reach $220 this week. He doesn't mind paying inside. "It just takes two seconds," he said.
A handful of area stations are avoiding the problem of interchange fees and charge backs altogether by accepting only cash. Filling up at a cash-only Freestate station in Rockville, Ann Seltz says she used to find paying with cash irritating until the fuel bill for her Audi A4, which should take only premium gasoline, got so expensive. "Now I go wherever's cheapest," she said.
