Credit Cards punching Profits of Convenience Store Retailers' in US

Delhi, Delhi India (PressExposure) March 02, 2007 -- Higher prices of gasoline are a subject of repugnance not only for the customers, but the convenience store retailers are also finding it as a challenge. Since, the increased prices are badly affecting their profit margins. The main reason behind the continuous decline in profit margins is that costs, especially credit-card fees, seem to continue to escalate relentlessly.

A study that was completed by “National Association of Convenience Stores”, in February 2007, for the stores selling gasoline and accepting plastic reveals that credit-card fees had cost an average of US$ 45,785 in the year 2005. The figure actually eclipsed the average per store pre taxing revenues of US$ 42,196 in the same year. Credit/debit fees totaled about US$ 5.4 Billion on an industry wide basis.

Most people prefer to make payment by plastic as the prices of gasoline increase. This may be either because they don’t carry cash (or probably they don’t want to spend it) or because they attempt to avoid the immediate pain of paying higher prices. As credit card billing system gives them some time to pay up the money.

Use of plastic money at pumps increased with the constant rise in average annual prices of gas, which grew from US$ 1.85 in 2004 to US$ 2.27 in 2005. The enormous increase in the prices of gasoline during the year 2005 has accelerated this trend. NACS consumer statistics show that about 65% consumers today prefer to pay their gasoline prices via credit cards.

RNCOS has published a report on “U.S. Convenience Stores: A Market Analysis”. As per RNCOS, credit card fee typically costs a convenience store about 3% of actual transaction that’s made up of several components like PIN based debit transaction, interchange and acquiring fees. Credit card transaction is drawing much of the concern for the convenience store retailers, as it may cost more for the stores than any other channel such as supermarkets, hypermarkets and so on.

Retailers are now considering cash discounts due to the continuous rise in credit-card expenses. These retailers generally offer a discount that ranges from 1 cent to 6 cents on each gallon for the customers who make cash payments. This way the retailers are trying to share the savings of cutting down the credit-cards expenses with customers.

About the report

RNCOS report on “U.S. Convenience Stores: A Market Analysis” answers the key questions such as “What’s the market size of US retail store industry”, “What’re the driving factors for this sector” etc. The report further analyses the state-wise growth of convenience stores and provides an overview of key players in US Convenience Stores Industry.

About RNCOS:

RNCOS, incorporated in the year 2002, is an industry research firm. It has a team of industry experts who analyze data collected from credible sources. They provide industry insights and analysis that helps corporations to take timely and accurate business decision in today's globally competitive environment.

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Shushmul Maheshwari

Head of Business Development

29, 1st Floor, Patparganj Industrial Area, Delhi 92


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Press Release Submitted On: March 02, 2007 at 2:11 am
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