Clark Howard's Tips

Cash discounts make a comeback at gas stations

August 23, 2007

Do you remember when gas stations used to offer cheaper prices if you paid cash? Cash discounts at the pump are starting to make a comeback.

This might seem like an odd thing, especially considering that people overwhelmingly fuel up using their credit cards nowadays. But the gas stations take a big hit on the credit card processing fees for every charge at the pump. These fees can be anywhere from several cents per gallon to a dime per gallon.

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So some stations now offer cash-paying customers anywhere from a nickel to 15 cents off per gallon to encourage cash transactions. The Los Angeles Times reports that cash discounts on the West Coast are spreading like wildfire.

But this trend also raises a dilemma for stations. If people don't pre-pay via credit card, there's always the risk that they'll fill up and drive off without paying at all. Meanwhile, if you have to pay cash upfront, the stations may have to hire more staff or worry about losing business because of long lines at the pump.

There's a balance that has to be struck. QuikTrip is trying to strike that balance by offering a pre-paid cash card. You have to register your personal info at the gas station -- to discourage you from driving off -- and then you're issued a card that lets you fuel up.

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