At Potts Corner, a gas station and convenience store in Covington, motorists traveling with cash in their pockets can save as much as 10 cents a gallon over those paying with a credit card.
The small Chevron station, nestled deep in Newton County where highways 212 and 36 intersect and local residents make up most of the traffic, was out front on a small but apparently growing trend in metro Atlanta and Georgia -- gas stations that give breaks to those paying with cash.
Their motive: it helps the businesses avoid paying the rising fees banks charge for debit or credit card use.
"It's just a plain simple fact, if I don't find a way to keep more of the money I get for the gas I sell, I go out of business," said Johnny Potts, who has owned the station since 1987 and started offering a discounted cash price three years ago. "It's what's happening to a lot of stations. The swipe fees make it hard to make money."
About one-third of customers pay with cash, Potts said.
"As the expense of credit cards have continued to rise, you're seeing more of this," Jim Tudor, president of the Georgia Association of Convenience Stores. "The fees paid to the credit card card companies often exceeded what the retailer was getting for the product."
A handful of stations offering a discounted cash price dot metro Atlanta, including a Valero station on Ashford-Dunwoody Road in north Atlanta, a Chevron station in East Atlanta, and a Marathon on Highway 36 in Newton County.
They differ from discounts offered by big chains like Kroger and Costco because the lower price is available to all motorists, not just members of the company's savings program.
The convenience store industry says profit margins have gotten steadily thinner, despite the high cost of gas, as Americans drifted to an almost exclusive use of credit or debit cards for most purchases. Banks and credit card operators -- specifically giants Mastercard , Visa and American Express -- charge the stations as much as 3 percent a transaction, cutting into the roughly 1 to 3 cents the stations make on each gallon of gas sold.
Credit card companies make between 10 and 12 cents on a $3.50 gallon of gas, said Tom Kloza chief oil analyst for the Oil Price Information Service or OPIS. The total cost of credit/debit fees to convenience stores in 2010 was $9 billion, according to the National Association of Convenience Stores. That was larger than the $6.5 billion in profits the convenience store industry took in that year, NACS said.
Station owners also complain that the ability to pump and go with debit or credit cards has made it more difficult to get motorists into stores, which is where operators make most of their money, industry leaders said. Paying with cash brings customers into stores and helps improve sales.
Tracy Rutherford, a regular customer at Potts Corner, uses cash and credit at about an even 50-50 split. When he has the cash, he'll spend it there, but he likes the convenience of credit and isn't bothered by the higher cost.
But Tony Jones of Monticello said he preferred paying with a debit card and didn't think the cash discounting would be very persuasive.
"We rely a lot on convenience in this society, I'm afraid," he said.
Some gas retailers have tried to circumvent the big credit companies by striking deals with smaller banks and creating their own cards. Like Kroger and Costco, motorists have to sign with the gas retailer to get the discounted prices.
That strategy has run into problems. Savannah businessman Greg Parker, who owns 24 gas stations in Georgia and South Carolina, is suing the state after the Georgia Department of Agriculture wrote new rules recently that prohibit billboard advertising of prices that are limited to membership programs.
Parker said gas retailers are fighting back against the banks and credit companies, "which is creating tension in the industry."
State leaders said the changes, which also affect companies that offer separate cash and credit prices, is an attempt to make sure consumers are aware of prices that are open to all motorists.
"A gas station/convenience store can advertise both the cash and debit/credit on their sign," Rich Lewis, director of the agriculture department's fuel & measures division. "They may also only advertise the higher debit/credit price only. They may not post only the lower discount price. The prices must be clearly identified (cash versus debit/credit) and must be advertised in uniform ways.
"Any other type of discount that is not available to all consumers at the time they pull up to the pump (such as a “club” or “membership” discount) are required to be advertised on secondary signage and not on primary signage," he said. "The discounted price on the secondary sign must be in cents per gallon (i.e. “10 cent per gallon discount,” not price per gallon)."
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