A lot of places do this, whether it is "allowed" or not. But my understanding is that after much push and pull between merchants and processors, most processors do allow it.

Interesting! Any idea why that is?

Because the margins on gas are tiny.

The gas stations would have never had any credit card uptake without it and people have to buy gas and are extremely price sensitive so would have continued shopping at cash only gas stations.

Unlike say a clothing store where the convenience of credit overcomes the price sensitivity, you can defer the purchase and the merchant has higher margins.