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Why is it cheaper to pay cash for gasoline?

Many gas stations charge you less if you put your credit card away and reach for the cash.

ATLANTA — Cheaper gasoline might be right under your nose if you simply change the way you pay for it.

According to the National Association of Convenience Stores, nearly 75% of all purchases in 2020 were made by customers using credit cards. However, many places will charge you less for gasoline if you put the credit card away and reach for your cash.

“Depending on where you are, that may be 10 to 15 cents a gallon,” said Andrew Lipow of Lipow Oil Associates.

Yet, the savings could be even more than that.

A recent check of GasBuddy found a station in Marietta and another in Canton charging 10-cents a gallon less if you pay cash. Another in Loganville was charging 38-cents a gallon less, while yet another in Temple was giving a 75-cent a gallon discount.

Credit card companies charge gas stations and others a fee to cover the cost of processing each transaction. According to the Georgia Department of Consumer Affairs, the fee is generally 2% to 3% of the purchase price.

Lipow even added that gas stations would rather you pay cash.

“Companies like Visa and American Express are charging that gas station owner roughly 25-cents every time you swipe the card,” he explained.

Another reason stations are encouraging you to pay cash? When you use a credit card you can pay at the pump. Paying with cash means you’ll go inside.

“To buy the snacks and the drinks and whatever they're selling,” Lipow said. “Most of the profit for a convenience store is coming from the sale of food, beverages, and cigarettes

According to the Department of Consumer Affairs, retailers are not allowed to make a profit if they charge you extra for using a credit card. It has to be the amount credit card companies are charging them.

  

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