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Published: 7/1/2008

Toledo area gas stations cut prices for drivers using cash

BY JON CHAVEZ
BLADE BUSINESS WRITER
The BP at Dorr Street and Secor Road in Toledo offers 3 cents off a gallon. The BP at Dorr Street and Secor Road in Toledo offers 3 cents off a gallon.
THE BLADE/LORI KING Enlarge | Buy This Photo

Looking for a deal at the gas pump? Increasingly, that may mean carrying a wad of cash.

At least two Toledo area gas station owners offer discounts to customers who pay cash instead of using a credit card - a transaction that can cost gas station owners 9 to 12 cents a gallon in "interchange" fees.

"When gas was under $2 a gallon it was OK," said Sam Baiz, manager of the BP station at Secor Road and Dorr Street, which last week began offering a 3-cent-a-gallon discount to customers who pay in cash.

"But now we're losing a lot of money because more people are using credit cards. Even at 3 cents off we're still hurting, but with this idea we're trying to get people to think about using cash."

At the Firebird gas station on Alexis Road at Douglas Road, owner Arvind Reddy Toughtreddy sold the fuel two weeks ago at a discount of 5 cents a gallon to customers who paid ion cash.

He said yesterday he plans to increase that to 6 cents and hopes more people pay cash because each credit card transaction costs him 9 cents a gallon. "It's really working, so I thought this might help," he said.

Mr. Baiz said credit card companies charge his BP station 8 cents a gallon on gas purchases. Previously, when gas was less expensive, more customers paid in cash but that changed when fill-ups began costing $40 to $70.

According to a recent article in BusinessWeek, credit card companies have long charged interchange fees, but as credit-card use has soared, about 60 percent of gas purchases were made with cards last year.

The National Association of Convenience Stores estimated that the share of all convenience store purchases made with credit cards has risen from 32 percent in 2003 to 56 percent today.

Congress is considering legislation to force credit-card companies to negotiate their interchange fees with merchants.

However, Visa Inc. and MasterCard Worldwide both argue that they do not receive revenue directly from the fees. Instead, banks that issue the cards collect the interchange fee and pay the credit-card companies a processing fee.

The credit card industry also says interchange fees cover crucial services and provide merchants and customers a degree of fraud protection as well as safe, convenient transactions.

Besides offering discounts for paying in cash, many gas stations are installing electric signs that let them change advertised gas prices quickly along with prices at the pump.

BP, Speedway, Marathon, and others have the new signs, which cost about $6,000.

"It's easier for the help in the winter time. The old ones would stick and the faces of the numbers get brittle and break easily," said Roy Clark, vice president of J-F Enterprises, which owns area Barney's convenience stores and operates all area BP stations.

The new signs have greater visibility, he added, not to mention they can be changed quickly as gas prices fluctuate over the course of a day. "You can now change [numbers] in the rain and not get wet," Mr. Clark said.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.



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