ARLINGTON, Va. — Despite Visa Inc.'s announcement that it will cap card interchange on gasoline purchases, some gasoline retailers around the country have begun rewarding consumers for abandoning their cards at the pump.
This could possibly have a significant impact on credit union interchange income as gasoline purchases have long been a steady part of the income stream from debit cards.
Visa announced a cap on card interchange for gasoline purchases earlier in July and put the cap into place starting July 18. The move capped debit interchange for gasoline purchases at $0.95 per transaction and, beginning in October of this year, the card brand said it would make changes to the gasoline interchange rate on its credit card transactions as well. Until then, Visa said it would work with processors and retailers on a case-by-case basis to move those changes into place in advance of October.
Recommended For You
At current gasoline prices, the debit interchange cap will save gasoline retailers as much as 60% in interchange costs. Depending on which credit card a consumer might use, the cap could lower interchange on credit card gasoline purchases even more, the card brand said when announcing the change in policy.
But there are signs that gasoline retailers around the country have not waited on Visa and instead are taking steps to get consumers to use cash or private label cards issued by oil companies.
Sheetz Inc., a family-run chain of convenience stores and gasoline stations, has announced a test program where Sheetz customers in western Maryland and West Virginia can apply for cards to use at the pump to verify their identity and make the process of using cash to pay for gasoline easier and faster.
The fact that most gasoline retailers require customers using cash to pay before they pump has effectively limited the appeal of cash as debit cards and credit cards are often cheaper or easier to use. The Sheetz test policy is meant to speed that process.
"The cost of gasoline continues to rise and unfortunately, so do the resulting drive-offs by a few dishonest individuals. Our increasing losses from these individuals who do not pay have forced us to go to pre-pay as a solution to control theft. While this change will help relieve the pressure of gasoline theft, we also know that it could cause loyal, honest customers to feel unjustly penalized," stated Louis Sheetz, executive vice president of marketing for the firm when it rolled out the program.
"We are pleased that we don't have to inconvenience our loyal customers. Pump First offers a solution to help us control gasoline theft and still maintain a high level of convenience for our customers," said Sheetz. "Future plans include adding other benefits for our Pump First customers, including exclusive coupon offers and even reward programs."
Eventually, Sheetz hopes to roll the program out to all 350 of its stores.
A smaller convenience and gasoline retail chain, Tom's Convenience Stores, has begun offering the RevolutionCard, a rewards and discount card issued by Shipley Oil, another subsidiary of Tom's owner the Shipley Group. The card will have a personal identification number attached and a much lower interchange rate. Tom's has offered consumers a 10 cent per gallon discount for using the card, which the cardholder can also use to purchase other Shipley energy products.
Meanwhile, the 570-store WaWa chain has put both approaches into place, on the one hand test marketing a program that offers lower prices for gasoline when customers use cash and also launching a program that allows customers paying cash to use the pumps more quickly and efficiently.
Ironically, WaWa also issues a Visa card and uses rewards points that can be redeemed for gasoline as a buying incentive, even as it tries to discourage the use of other Visa cards.
None of the chains would speak for the record yet on how their customers are receiving the payment changes, but all indicated that they were committed to them in the long haul, noting that they expected gasoline prices to remain high going forward.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
