While convenience stores were able to rein in most of their expenses in 2003, a significant expense continued to grow: credit/debit card fees. In 2003, these fees equaled approximately 80 percent of a store's profits, and are expected to grow in the coming years.
- Credit card fees are high and growing. For convenience stores, credit/debit card fees, as a percent of gross profit, jumped 20.8 percent in 2003, and now equal 5.8 percent of gross profit. This means that these fees cost the average convenience store $24,265 in 2003, a figure approaching the average per-store pretax profit of $30,700. On an industry-wide basis, the total cost of credit/debit fees was approximately $3.2 billion.
- Credit- and debit-card transactions accounted for 32.3 percent of the convenience store industry's $337 billion in sales in 2003, or more than $108 billion in volume. This is a huge increase from the $80.2 billion in credit/debit volume in 2002.
- Credit-card fees are the fourth-largest expense at the store level. NACS estimates that card fees are projected approximate the cost of store rent by 2020.
- 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 from 2002 to 2003 (from $1.40 to $1.55) led to a 10 percent increase in the use of credit cards at the pump, with 49 percent of all gasoline customers paying with plastic in 2003. The huge increase in gasoline prices in 2004 -- and 2005 -- has accelerated that trend, and NACS estimates that 70 percent of all gasoline purchases are now paid with plastic.
- With razor-thin margins for retailers selling motor fuels, the credit card associations often make more profit on a gallon of gasoline than the retailer selling the gasoline.
- For the first time in 2003, Americans made more in-store payments electronically than they did with cash or checks, according to a Dove Consulting/American Bankers Association study 52 percent of all purchases were made with debit and credit cards.