A Gasoline Retailers’ Group Asks Congress for Interchange Relief

A top official for a trade association representing half of the gas-station operators in Colorado has written to Congress asking for regulation of credit card interchange fees. In a letter dated Aug. 15 and printed in today's online edition of the Rocky Mountain News, Roy A. Turner, executive vice president of the Colorado/Wyoming Petroleum Marketers Association, decries rising interchange fees imposed by the bank card associations and calls upon Marilyn Musgrave, R-Colo., to whom the letter is addressed, to lobby Congress “to act on the credit card interchange fees.” An increase in interchange rates this spring, to which Turner's letter also refers, has raised the hackles of merchants across industries. But Turner's letter represents the first overt effort to solicit government regulation of interchange aside from the actions of the Merchants Payments Coalition, a group of retail trade associations formed in Washington, D.C., earlier this year to lobby for regulatory relief. Perhaps few merchants are as sensitive to acceptance costs as gas stations, where steadily mounting gasoline prices are driving up interchange costs in absolute terms. Gas prices have risen across the country for much of the year, but the rate of increase has accelerated over the past two weeks. At the same time, most stations over recent years have installed self-serve pumps, which allow prepay through credit cards but increase marketer's reliance on card payment. Interchange is typically expressed as a percentage of the sale, with an additional fixed component. “Credit card transaction fees paid by retailers have been increasing, creating a windfall for the credit card processing company on the high cost of fuel,” Turner says in his letter. He argues interchange is now a significant but “overlooked” contributor to high gasoline prices. “Unfortunately, there is little regulation or oversight by any government agency of credit card transaction fees, which including the bank fees range from two percent to over four percent,” Turner tells Musgrave in the letter before asking her help in pushing for regulation of interchange. The price of regular unleaded gas in the Denver area has hit a new high of $2.62 per gallon, according to the Rocky Mountain News. Gray Oil Co., a Denver-based wholesale petroleum distributor quoted by the paper, says station operators pay 7.8 cents per gallon, or 3%, in credit card acceptance fees on a $2.60 gallon of gas, leaving about half a penny of profit after paying various other costs, including state and federal taxes. The largest cost, according to Gray, is transportation from the refinery, accounting for $2.10 on each gallon.