At the Pump And Past The Limit

By Simone Baribeau
Washington Post Staff Writer
Saturday, June 21, 2008

The pump slowed and cut off Brendan Baker's gasoline purchase at $74. He returned the nozzle to the pump, swiped his credit card a second time, then put the nozzle back in his 2000 Dodge Ram 1500 and continued fueling. He finished pumping and looked at his two receipts, which totaled $95.23.

"Normally I don't keep them because they remind me how much money I wasted," said Baker, a computer technician refueling at his local Sunoco station in Centreville.

With skyrocketing gas prices, many customers are bumping up against pay-at-the-pump credit card limits -- often $75. Rules limiting these transactions are nothing new, but with gas prices exceeding $4 per gallon, it's increasingly easy to exceed the limit, leaving many customers to face the hassle of dealing with two-transaction purchases.

At the station where Baker was filling up, 30 to 50 cars out of a total of about 900 hit the limit each day, according to the station owner. On a recent Saturday afternoon, the station bustled with Toyota 4Runners, Tacomas and other fuel-thirsty vehicles.

Back in 2003, when Jeff Urban bought his Hummer, paying $75 to fill up would have been unthinkable. But now, Urban joked, his goliath SUV will soon be a three-transaction vehicle.

Getting cut off mid fill-up is "a pain," Urban said after fueling. "Especially in Northern Virginia, where it's a go-go-go lifestyle, it's an extra couple of minutes out of the day that frustrates you."

Customers who pay inside stations can still use their credit cards like anywhere else and face no limit.

But at the pump, the size of credit card purchases has been limited largely to protect gas stations, which can be charged if there's a problem with the transactions. Purchases at the pump are particularly vulnerable to trouble since no signature is required to verify the user's identity. And since the credit card is swiped before the gas is pumped, there's no way to know the size of the purchase when it's authorized.

Visa, MasterCard and Discover Card generally guarantee that merchants will be paid the first $75 of a pay-at-the-pump transaction. American Express determines its limits based on the contractual relationship with the companies. But beyond those levels, gas stations are more likely to foot the bill in what are called charge backs if a transaction is bad.

Gas station owners and managers say they are already hard-pressed to hand more money back to credit card issuers. The high price of gasoline has left many stations in a financial fix. They've squeezed their average markup to remain competitive and the interchange fees they pay to credit card issuers, which rise with the sale price, are up.

The average station makes a profit of $60 at the pump per day, says Jeff Lenard, a spokesman for the National Association of Convenience Stores. "It's not uncommon to lose money selling gas. So the idea of losing $20 or $50 [in charge backs] is too much."

Visa recently amended its rules to make it less risky for stations to increase the limit on pay-at-the-pump sales. Until April 2007, merchants could be charged the entire amount of any bad purchase over $50. That month, Visa changed its rules so that merchants were liable only for the amount of the purchase that exceeded $50. In April of this year, Visa increased the limit to $75.

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