Buried letters will cost you money

Ever heard of PCI DSS? Depressingly I have quite a few times now. You may have seen it buried between some lines you got on a statement from the bank or credit card company. Between the two helplines I run for Forecourt Trader and Convenience Store, I have had quite a few retailers ringing me about this cost of compliance fee on traders who take credit/debit cards.

It’s full and pompous title is Payment Card Industry Data Security Standards and it’s a complete con by the banks/credit card companies to screw more money out of traders to protect the money guys’ own backs in fraudulent situations.

Latest to get in touch was accountant, Carl Evans, who is trying to save forecourt and garage North End Motors in South Wales. They rent a swipe machine from Global Payments and Carl had noticed the compliance fee. He asked if anyone was putting together any joint action type response to this rip off. I asked the PRA the same question and was put in touch with Gordon Balmer of Fuel Card Insights, an independent consultant currently advising the PRA in the area of payments.

He says: "In terms of PCI compliance, obviously it is another cost; however the card schemes require the merchant to be compliant in order to protect data integrity and prevent fraud. If a merchant is not compliant then they can have their ability to accept payment by cards withdrawn.

"In addition, as a main part of the cards business model is the management of risk. a hike in bad debt will inevitably result in higher merchant service fees back to the merchant so it is ultimately in the interests of the merchant that they comply. Therefore, unfortunately it is another cost to hard pressed merchants, it’s a cost of doing business. For your interest, the PRA has spoken with companies who offer this service to understand this matter in more detail and to see if it is possible to obtain lower rates."

Banking on independents

Elsewhere in this issue, there is a feature on banks and financial services. I didn’t have much good stuff to say about banks, in part because none responded when I asked them how they were doing in the forecourt world.

However, although too late for the feature deadline but just in time for this column, Mark Lodge, relationship director at Lloyds Commercial Banking in the Midlands, has been exploring the growth opportunities.

He says: "For businesses operating in the forecourt sector, it is clear that the industry continues to see significant activity in terms of sales and purchases, as well as lettings."

He points to some of the key sector highlights over the past 12 months: BP continuing its acquisition of sites for its M&S format; Asda confirming its desire to add 100 stand-alone sites to its network by 2018; Esso disposing of further regional portfolios to both Euro Garages and MRH; and Sainsbury’s opening its first stand-alone forecourt with a c-store.

He asks: "What does this tell us? Strategic repositioning by oil companies to focus on distribution, and/or carefully crafted joint ventures with strong retail brands appears set to continue."

And he adds: "Now is the time to reflect on what this might mean for the independents. Strong retailing has long been a critical success factor for independent forecourt businesses. Add to that the convenience factor that retail consumers demand, and we have a recipe for well-located sites becoming destination stores, with a myriad of offerings to tantalise and meet the needs of the retail consumer, who is able to pull up right outside the door, at more or less any hour. For some indies, this might mean exploiting more of what they have already got, investing in the site to provide a deeper and broader offering, building convenience loyalty."

Of course, it requires money. As Lodge observes: "A full-scale knock-down rebuild can cost over £1m, and a similar sum would be required for a well-located site acquisition. Funding such capital investment is a major decision, even for larger groups, and it can sometimes require an element of external financing, which is often where a bank can step in.

"Successful funding requires a business to have a strong management team with a solid business plan, resources to scale their operations and proven capability to perform successfully. With this they can confidently approach a lender for the support they need to achieve growth."

And he says Lloyds is lending. "With a net growth of 6% in its lending to SMEs in 2013, against a net industry decline of 3%, Lloyds Bank Commercial Banking is committed to supporting businesses with the right funding solution, whether it be to facilitate an acquisition, premises refurbishment or to purchase new equipment."

So, if you want to make improvements, get a good plan and go try Lloyds.

Goggling at Google

Google got itself a patent in March to enable a robot in a car to automatically read road signs and spot obstacles. During test runs of its driverless car, Google says the vehicles have travelled 300,000 miles autonomously without incident. You’d think they would have been satisfied with dominating the information super highway!