Reporting Colin Smith
MINNEAPOLIS (WCCO) — Before you blame the messenger for gas prices still hovering around $4 per gallon, service station owners want you to know something: They’re hurting, too.
The biggest pinch comes from credit and debit card fees, charges which rise in lockstep with soaring pump prices.
“Even when gas prices are low it costs several hundred dollars a day, said Rick Bohnen, who owns two service stations on Penn Avenue in Bloomington. “It’s not uncommon to pay $200,000 per year just in credit card fees.”
Although the formula varies from card to card, the standard charge is $.10 per swipe, plus two percent of the total sale. Last year, swipe fees exceeded payroll as Bohnen’s biggest expense.
“Whenever gas prices spike, so does the piece of my profit that goes to Visa and MasterCard,” Bohnen said.
It’s not the only number that indicates Bohnen is in a brutally tough business. According to the authoritative Oil Price Information Service, retailers sell gas for an average 13 cents per gallon more than they paid for it. But the industry average cost to operate and sell gas is 15 cents per gallon.
A Forbes magazine report revealed that the fees totaled more than $11 billion in 2001, 87 percent higher than the entire industry’s profits. It marked six years in a row that the industry paid more in card fees than it profited.
Between 2004 and 2011, while the price of gasoline went up 80 percent, card fees increased 180 percent.
As vice president of Minnesota Service Station Association, Bohnen is hopeful state lawmakers will consider tackling the issue during the 2014 legislative session.
“I think they should look at exempting all taxes from credit card fees,” Bohnen said. “Forty six cents of every gallon is tax, and while retailers pay card fees on that tax, we don’t reap any benefits from it.”
A tax increase on cigarettes will also have Bohnen reaching for his checkbook this summer.
The state of Minnesota will take in-store inventory of all service stations before imposing a ‘floor tax,’ in which the station owner will have to immediately pay $1.60 more per pack.
“That’s another cost that I have to pay out of pocket,” Bohnen said. “Sure, I’ll eventually make it back when I sell (the cigarettes), but that could take a while, and in the meantime I’m out the money.”