Friday, June 16, 2006

Credit Card Fees Show No Mercy

DES MOINES – As credit card fees rise with the cost of gasoline, c-stores are struggling to keep their heads above water. Some, like the Eastown Amoco in Des Moines, tread water for as long as they can, but have succumbed to the high fees and have been forced to close their pumps.
Jim Krueger, owner of the Eastown Amoco, told The Des Moines Register "Credit card fees can eat you alive." Those high fees, and a decline in profits, have made him shut down the pumps and only serve as a towing service. "I reached age 61, and I decided I am not taking money out of my retirement fund to offset my gasoline business," he said.

Other stores in the area, while they remain open, aren't faring so well either. Urbandale, Iowa-based ShortStop is a six store chain owned by Dave Carpenter.

According to Carpenter, roughly 70 percent of customers pay with credit cards at ShortStop. Last year, he told The Des Moines Register, one of his truck stops paid $650,000 in credit card fees. "We've always had good times and bad times in this industry. Now we're in a bad void, and nobody knows what to do about it," he said.

"Credit card fees are the biggest issue in the convenience store industry right now. It's the fastest-growing expense behind labor and rent," said Jeff Lenard, director of communications for the National Association of Convenience Stores to The Des Moines Register.

Gas stations pay 3 cents per transaction for credit card purchases. NACS estimated that stores paid $5.3 billion in gas-related credit card purchases last year, while industry profits totaled $5.8 billion.

Casey's General stores saw credit card fees increase 39 percent for fiscal year 2006 as reported by The Des Moines Register, even though they installed debit card payment at the pumps to decrease the fees,

"It's a big number that is eating into our overall gross profit," said CFO Bill Walljasper.Don Rhodes, policy manager for payments and technology for the American Bankers Association suggests eliminating credit card payment options an alternative to high credit fees. "It's not unheard of," he said.

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