• In 2006, credit/debit card fees, as a percent of gross profit, were 7.6 percent, an increase from the 4.8 percent in 2002. On an industry-wide basis, the total cost of credit/debit fees was $6.6 billion, more than double the $3.2 billion in fees a recent as in 2003. The total cost of credit card fees ($6.6 billion) in 2006 exceeded convenience store industry profits ($4.8 billion), meaning the credit card industry took in more at the stores than the store owners themselves.
• Credit-card fees are the second-largest expense at the store level. Only labor costs are more.
• Particularly with the rising cost of gasoline and the higher transactions at the pump, retailers are seeing the impact of credit-card transaction fees. The overall increase in average annual gas prices led to a significant increase in the use of credit cards at the pump. NACS estimates that 60-70 percent of all motor fuels purchases are now paid with plastic.
• The rise in credit card fees has prompted an increasing number of retailers to consider cash discounts at the pump.
• Retailers also are hit with additional costs because of chargebacks, known as "Reason Code 96." While retailers have not seen the specific rule (no retailer has seen the complete credit card operating rules that they are told to follow) they can be denied payment by the banks if they authorize a pay-at-the-pump transaction for more than $50 for Visa and more than $75 for MasterCard, even though the transaction is not challenged by the customer. As long as fuel prices remain high, "Reason Code 96" will substantially increase the cost of credit card aceptance. 

Credit card fees cost a typical convenience store 2.5 to 3 percent of the transaction, which is made up us several components, some of which can be costlier for convenience stores than other channels.

• The largest component of credit card fees — interchange — accounts for roughly two-thirds of the fees charged to convenience stores. Many convenience stores are charged higher interchange rates set by the card associations whose members are card-issuing banks. Each type of card carries different fees that reflect factors like fraud rates, risk factors, transaction volume and processing path. American Express and Discover also set interchange rates, but operate as independent entities as opposed to the association approach that governs Visa and MasterCard and their respective member banks.
• There is a considerable difference between the fees charged for a PIN-based debit transaction and a credit transaction. Convenience stores, which generate approximately two-thirds of their sales volume from motor fuels, tend to be charged a higher rate than that other retail channels because they are not as easily able to steer pay-at-the-pump customers to choose debit and enter a PIN as other retailers. As a result, many debit purchases, which should carry the lower rates, are processed as credit and carry higher costs to convenience store retailers.
• The other major component of credit card fees is acquiring fees; credit card companies have increased their acquiring fees, such as authorization, capture and settlement fees, charged to retailers over the past few years — even though the per-unit processing costs have declined.
• Another concern for convenience store retailers is that they are often hit twice for fees from the same customer visit – once when the customer pays at the pump, and once when he or she pays inside the store, if that is also a credit/debit card transaction.

• NACS is working with dozens of retailers — representing more than 2,000 stores — regarding their participation in a new money-saving credit-card processing program. NACS, in partnership with First Data Corporation, introduced the new program designed to reduce card-processing fees for convenience store and petroleum marketers in October 2003. This "interchange plus" program allows retailers to choose between a card processor that charges a percentage of the sale versus one that charges cents per transaction. An advantage of the cents-per transaction approach is that as the dollar value of the transaction grows (such as with the rising price of gasoline), the card processing fees remains the same.
• In April 2003, Wal-Mart and thousands of other retailers won a class-action lawsuit against Visa and MasterCard that claimed that the credit-card companies, individually, and in conspiracy with their member banks, violated the federal antitrust laws by forcing merchants who accept Visa and/or MasterCard-branded credit cards for payment also to accept Visa and/or MasterCard-branded debit cards for payment, and by conspiring and attempting to monopolize a market for general-purpose point-of-sale debit cards. Retailers said that these actions caused merchants to pay excessive fees for credit and debit transactions. As a result, the card companies settled the case and agreed to pay back damages, temporarily reduce fees and establish clear and distinct visual as well as electronic markers for identifying a credit from a debit card carrying a Visa or MasterCard logo.
• A greater use of PIN-based debit cards — which customers prefer for convenience and greater security — could also help reduce fees — as long as retailers are rewarded by the lower interchange for these more-secure transaction methods. 
• NACS is a founding member of the Merchants Payments Coalition, a group made up of trade associations representing retailers, restaurants, supermarkets, drug stores, convenience stores, gas stations, on-line merchants and other businesses that accept credit and debit cards and are concerned about the increasing interchange fees charged by banks and credit card companies to process credit and debit transactions.