The PRA has launched a campaign to highlight the low level of fees paid by fuel card issuers, warning they are not sustainable, and has written to all six major fuel card issuers requesting they urgently conduct a review.
It says that with the current high fuel prices, and the media questioning whether retailers are taking a fair margin, the issue of fuel card payments needs to be addressed.
Fuel cards account for about 20% of overall fuel sales, comprising around six billion litres of bunker fuel for HGVs, and an additional three billion litres for cars and vans.
The card commission or handling fee paid to retailers has always been much lower than the margin from other types of sales but it was argued that this was offset because fuel card customers are loyal and purchase goods from the shop for their own consumption.
However, PRA executive director Gordon Balmer said margins from fuel card purchases are no longer realistic. He explained: “I have been told and have gone public with the fact that retailers need around 10-11p per litre margin to pay operating costs and to continue to invest in their sites, for example in EV charging points as we transition from fossil fuels. In addition to this, the latest research suggests that non-fuel transactions are also falling, heaping further pressure on the returns made from business customers.”
He stated that ‘card commission’ of just over 1p per litre, or in the case of bunker cards a ‘handling fee’ of less than 1p per litre, is unrealistic when operating costs, stock losses and forecourt crime are taken into account.
“The market has evolved but the fuel card business model has not adequately adapted. The current trajectory is not a sustainable one for independent retailers,” Balmer said.
He pointed out that independent forecourts provide most of the high-speed diesel pumps and are critical in keeping the UK in business, adding: “I know how important independent operators are to the UK’s infrastructure, and how hard you have all been working despite the constant and untrue allegations made by motoring organisations and some members of the government.”
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