Credit cards. Can’t live without them, but can we afford to live with them?
The history of plastic on the forecourt has been a constant battle between the providers and the retailers. For those of you with long memories, it all started with Barclaycard and Access. The big decision was whether you scrambled to sign up to an agreement, in case you got franchised out, or did you say that you weren’t going to give the banks some of your hard-earned cash when you were providing them with the biggest-selling attraction they had with their potential customers.
As usual, the forecourt industry caved, and the rest is history. The only interesting diversion along the way was the battle over surcharging for credit card sales. The net result of that was a rare victory for the retailer. Yes, you could legally surcharge a credit card sale by the exact percentage of your service charge, but no, that didn’t stop the credit card company withdrawing the franchise from you for differentiating between its customers and cash customers.
Having said all that, the relationship with the mainstream card providers has probably never been better. Compared with the old days (remember the waste paper bins full of carbon paper and those blackened fingers you just couldn’t seem to get clean?), we submit one lot of electronic data, receive our money fairly quickly and the service charge percentage paid has reduced to manageable proportions, especially considering the alternative costs associated with cash handling and banking. And while the introduction of Chip & PIN was of ’Terminal 5’ proportions, the result has been, by and large, the end of the wading through mountains of EFT vouchers in order to challenge a potential charge-back of a transaction that took place two months ago.
The situation with the fuel card providers, however, is not nearly as sweet. Basically, they have not changed with the times nor have they sufficiently streamlined their operations. I say ’they’ but obviously, following all the earlier consolidation, I’m mainly talking about Arval. The huge rise in pump prices over the past few months may have been the catalyst for the industry to start applying pressure, but in truth this is something that should have started a long time ago.
Unlike Visa or Maestro, an Allstar card is only of any value if it can be used to buy fuel. The companies that use Allstar have to buy fuel for their fleets whether they use Allstar or some other method. The only question to be answered is who should foot the bill for the service the fleet operator is receiving. Up till now the forecourt industry has been mug enough to pay all of the costs involved. We are now in a position to start shaping our own destiny. What happens (apart from a possible visit from the OFT?) if, as a start, we give Allstar an ultimatum. Reduce your service charge to 1.5% (the level of most of the oil company cards) or we will all start surcharging your customers. If we stick together this is one battle that can be won.
Then we need to look at the whole fuel card market. I’m prepared to acknowledge that the oil companies’ own fuel cards can have a very significant effect on the volumes pumped by our sites. But even the smallest company was happy to set up schemes at 1.5% on an 80p litre. If they were worthwhile then at 1.2p a litre they should be worthwhile now. So that’s the next stand to be taken, with both the oilers and Arval.
The final step, of course, is to pay nothing. Why should we, as retailers, be paying for the fleet operators’ convenience? If they want a system that lets them control their issuance, gives them fuel economy indicators and provides them with an efficient method of administration then let them be the ones to pay for it. If the costs are transparent and up front it gives a wonderful incentive for the fuel card operator to increase its efficiency. Surely there has never been a better time for the industry to make a stand?