Hitting credit limits at pumps

The pump slowed and cut off Brendan Baker’s purchase at $74. He returned the nozzle, swiped his credit card a second time, then put the nozzle back in his 2000 Dodge Ram 1500 and continued fueling. He finished pumping and looked at his two receipts, which totaled $95.23.

“Normally I don’t keep them because they remind me how much money I wasted,” said Baker, a computer technician refueling at his local Sunoco station in Centreville, Va.

With skyrocketing gasoline prices, many customers are bumping up against pay-at-the-pump credit card limits -- often $75. Rules limiting these transactions are nothing new, but these days it’s increasingly easy to exceed the limit, leaving many customers to face the hassle of dealing with two-transaction purchases.

Back in 2003, when Jeff Urban bought his Hummer, paying $75 to fill up would have been unthinkable. Now, Urban said, his goliath SUV will soon be a three-transaction vehicle.

Customers who pay at the register face no limit. At the pump, the size of credit card purchases is restricted largely to protect stations, which can be charged if there’s a problem with transactions. Purchases at the pump are particularly vulnerable to trouble because no signature is required to verify the user’s identity. And because the credit card is swiped before the gas is pumped, there’s no way to know the size of the purchase when it’s authorized.

Visa, MasterCard and Discover Card generally guarantee that merchants will be paid the first $75 of a pay-at-the-pump transaction. American Express determines its limits based on the contractual relationship with the companies.

The average station makes a profit of $60 at the pump per day, says Jeff Lenard, a spokesman for the National Assn. of Convenience Stores. “It’s not uncommon to lose money selling gas. So the idea of losing $20 or $50 [in charge backs] is too much.”

Visa recently amended its rules to make it less risky for stations to increase the limit on pay-at-the-pump sales. Until April 2007, merchants could be charged the entire amount of any bad purchase over $50. That month, Visa changed its rules so that merchants were liable only for the amount of the purchase that exceeded $50. In April, Visa increased the limit to $75.

Discover also has increased its limit to $75 from $50. MasterCard has had a $75 limit for several years.

In response to complaints over restrictions, a few individually owned stations have increased their limits.

A Gaithersburg, Md., station recently negotiated to increase its limits to $75 from $50, though some cards still cut off at $50. The station also offers customers a 5-cent per gallon discount if they pay cash.

Many customers are taking the deal.