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I have a gas station nearby that offers a $.15 per gallon discount if you get a member card. A requirement of this card is a linked bank account. What do they gain from having a bank account linked to this card over a normal debit/credit transaction? My only thought is maybe they are able to bypass the Visa/Mastercard fees. Are there any risks to doing this to save some money?

  • Is the 'member card' an actual credit card? Or are we talking about a loyalty card or charge card? – DJClayworth Jan 26 at 15:37
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It is about loyalty.

If I can capture your business I can count on a steady base level of sales each month. To capture your business I have to convince you that my product is better, my location is better, or that my price is better.

That discount makes it likely that you will use my business when you need gas. You might even alter your commuting patterns to make sure that you get gas at my business.

So why the linked card? Many times they will offer discounts based on other things you buy. Where I live the gas station account is linked to a grocery store account. The more groceries somebody buys the larger the discount at the gas station. Sometimes these will only link to a specific card network. Therefore implying that there are network discounts.

Risks? Yes there are risks. Every discount is the amount of money the business is paying to get access to your purchasing history. It might be the fact that you spend $x per month at store Y; or it is a detailed list of what you buy - all so they can offer you coupons.

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I think its an incentive to make you go there more often. They'll make profits from bulk/frequent buyers, rather than one-off fill-ups.

Lets say you tend to buy 10 gallons every week, and assume each gas station profits $0.25 per gallon, normally, and they all cost about the same $ per gallon. The odds are you'll go to whichever gas station is closest to you when you need gas. If there's 4 stations that you'd typically go to, each with an equal chance to be stopped at, then each station would profit $2.50 off you each 4 week period.

If you went out of your way to save the $0.15/gallon every week, then you'd fill up at the cheaper location and get your 10 gallons of fuel. The business may not profit as much ($0.10 vs $0.25 per gallon) but they'll get your service every time. That means over the 4 weeks, they'll get 10 * $0.10 * 4 which'll be $4 profit per 4 week interval.

In terms of risks, I'm not sure what kinds there are... But in the end it's about loyal customers and making more frequent, but smaller profits.

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