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Some independent gasoline retailers this month have stopped accepting credit cards because as fuel prices have risen, credit card interchange has cut deeper into their thin profit margins. Merchant banks pay issuers interchange and pass the expense on to their retailer clients as part of the discount rate. Mr. Ed's Chevron in St. Albans, W. Va., on June 1 ceased accepting major credit cards, citing the effect of interchange fees that equate to about 2% of each transaction. The Chevron station continues to accept private-label Chevron and Texaco credit cards, which do not charge interchange. Some independently owned and franchised gasoline retailers for years have refused to accept credit cards, including many of the 950 BP America-owned ARCO gas and am/pm convenience stores in five western states. To offset the pinch of interchange, more gas stations across the United States are offering a discount of several cents per gallon on gasoline purchases made with cash. A Shell gas station in Plantation, Fla., this week, for example, is offering a discount of 6 cents per gallon on cash purchases of fuel. Jeff Lenard, a spokesman for the National Association of Convenience Stores, tells CardLine that as the price of gas rises, retailers pay more in credit card fees, and more consumers are paying with plastic to handle their heavier expenditures on fuel. "Interchange represents about 80% of the fees gasoline retailers pay to credit card companies for accepting card transactions, and it cuts into profit margins that are already very narrow. Offering cash discounts or refusing to accept credit cards is the only option for some gasoline retailers," Lenard says.

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