Texaco Inc.'s decision to require its service station dealers to pay a processing fee on all credit card invoices they submit to the major oil company is gradually leading to higher gasoline prices at some Texaco service stations in the metropolitan area.
Faced with a 3 percent surcharge on all credit-card invoices they handle, some dealers say they are being forced to raise their prices--or restrict the use of credit cards to full-service islands only, barring credit-cards at the lower-priced, self-service islands.
When the surcharge was imposed on Nov. 1, Van Ness Texacare Servicenter in the District set up a new pricing system, charging three different prices for the same type of gasoline. A gallon of regular gasoline now costs $1.26 if pumped at the self-service island and paid for in cash. If pumped at the same island but paid for by credit card, regular costs $1.33 a gallon. A gallon of regular at the full-service island costs $1.59.
Other service station dealers had the same idea when they were required to pay a credit-card processing charge for the first time. Law's Texaco Service in the District also set up a cash-only island. But owner Roger Law said the station received so many complaints that he decided to eliminate the cash-only policy. Instead, he raised prices 3 cents a gallon across the board for gasoline pumped at the self-service island but kept full-service prices the same.
Robert Henry, owner of Belle Haven Texaco in Alexandria, was ready to launch a cash-only island until he heard that a similar move from another Texaco dealer cost him nearly 60 percent of his business. Henry has also been reluctant to raise prices at a time when other service station dealers are charging lower prices to compete for customers. But faced with a monthly loss of $1,900, Henry said yesterday he will have to increase his prices by a penny a gallon next month--and make similar increases every month to recoup the processing fee.
Johnnie Richards, owner of Richard's Texaco in Laurel, has also been absorbing the surcharge costs, which amount to about $300 a week.
Richards and many other dealers in the area are holding off any price increases until a federal court suit challenging the surcharge is resolved, possibly early next month.
The suit, brought by two Philadelphia dealers on behalf of all Texaco dealers, charges Texaco with illegal unilateral modification of dealers' contracts and with federal antitrust violations by trying to restrain trade and business of Texaco dealers.
Final arguments in the case, now in trial in the U.S. District Court in Philadelphia, are scheduled for Jan. 5.
"Everyone in the industry believes that if the Texaco case is upheld, there will be a general movement by all companies to put a charge on all customers or dealers," predicted Vic Rasheed, executive director of the Greater Washington Maryland Service Station Association Inc.
Already, Standard Oil Co. of Indiana (Amoco) is testing three different ways to recoup the increasingly high costs of running its credit card system. In Omaha, Peoria and Philadelphia, Amoco is experimenting with cash discounts. At the same time Amoco is testing credit-card promotions, offering cards for a $6 annual fee or for a larger fee, ranging from $8 to $20, which in return would give consumers such additional benefits as car-rental discounts, trip-routing services, and check-cashing privileges at Amoco stations.
H. Spencer Nilson, the publisher of a newsletter for credit card executives recently predicted that Texaco may also begin charging annual fees--especially if a federal judge rules that its surcharges are illegal.
Meanwhile, Exxon Corp. has notified its customers that beginning Feb. 1, it will begin tightening up on its finance charges for customers that don't pay their bills in full. Interest will be charged on all purchases, even those that aren't 30 days old, once the finance charge begins being assessed.