Payment by Credit Card, Fuel: Consumers Pay Double
7 May 2012 - Défi Media Group
Motorists familiar with this phenomenon. If they have to pay for their fuel by credit card, they take a 'service charge' of 2% or 3%. The oil explain this by the high commissions taken by banks and their low profit margin.
"The country's service stations that accept credit card payments are required to take service charges because the commissions taken by banks are higher than our profit margin," says Bhanoo Seegobin, president of the Petrol Retailer Association (PRA) .
Thus the PRA explains why the majority of service stations in Mauritius take a commission which varies between 1% and 3% when a customer presents a credit card (debit or credit card, Visa or Master Card). According to the PRA, while their profit margin is about 2% of the amount paid by consumers, the Committee on the card payment request that the bank is 2.5% of that amount. Service stations sell at a loss so when they accept such payments.
Moreover, the PRA is advising its members not to accept these cards but only those issued by the oil for including companies with a fleet of vehicles. "We prefer a customer to go get money from a cash machine (ATM), but if he does not have cash on him and he insists on paying by credit card, we indicate that we take a service charge, "says the president of the PRA.
The solution advocated by the PRA is that the profit margin for gas stations to 6%. And these could officially accept credit card payments without taking any service charge. "Even for tourism, it has repercussions. Tourists often do not have cash on them when they pass the gas station with their rental car. It's a bad image of Mauritius as taking a percentage of their payment, "says Bhanoo Seegobin.
For their part, consumers who find the easiest credit card payments at the time when the electronics are the above, are for their expenses. Pramode Jaddoo, economist at the Institute for Consumer Protection (ICP) notes that unlike most other merchants who accept credit card payments, such as supermarkets, petrol stations are working on fixed margins. He explains that traders whose margins vary because their rates are not regulated, can absorb bank charges on products whose profit margins are higher.
Some stations do not take 'service charge' on payments credit cards. They are thus a goodwill gesture to their customers which, in turn, become more faithful.