Have noticed this recently at a few gas stations in my area – it will be several cents per gallon cheaper to pay for gas with cash rather than a credit card. Why is that?
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You’ll see this at more than just gas stations, it’s not uncommon for smaller convenience stores having a “minimum purchase amount” required to use credit cards.
The reason for this is the way that credit card and debit card companies make money. For every transaction there is usually a fee of a couple of percentage points of the purchase. So if you go in and buy a soda for a dollar where the store may only be making $0.05 profit, and Visa charges a 3% fee, then the store owner just lost 60% of their profit on the purchase.
Larger companies and chains have the leverage of massive buying power to negotiate these fees down, or even get them waived entirely. So Walmart for example, is paying almost nothing if anything at all for credit card processing, and thus won’t have those kind of limits.
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