Credit cards allowed for fuel

Fin24.com>>Economy>>Credit cards allowed for fuel.

Motorists could soon use their credit cards to pay for petrol and diesel at fuel stations, the Department of Minerals and Energy said on Tuesday.

However, the draft bill published in the government gazette and the department’s website will only come to pass if the public gives the department a nod.

“The department has published regulations on the government gazette and we are asking the public to respond to that issue. This is a means of being technologically advanced and a way of coming on par with the international public,” spokesperson Bheki Khumalo said.

He said credit card payments would also contribute towards the fight against crime as fuel stations have always been easy targets for criminals.

Also, motorists without petrol cards would be at ease when filling up their cars late at night as they would no longer carry huge amounts of money around, Khumalo said.

“We all know that most fuel stations have fallen victim to robberies because people know there’s cash there. We have been talking to the SA banking council and the fuel retailers association… they are very excited about this,” he said.

Using credit cards will also come in handy for the 2010 World Cup events as thousands of tourists and sport fanatics expected to visit the country next year will travel freely without fear of being crime victims.

“We are expecting an influx of foreigners for the Confederations Cup and the World Cup and we think it’ll make it easier for them not to carry around cash… that’s a phenomenon in European countries,” Khumalo said.

A public meeting is expected to be held on May 20 to allow the department to “consolidate the input from the public”, Khumalo said.

The draft published in the department’s website reads: “A retailer must accept payment in the form of cash, debit, credit and hybrid cards for the payment of petrol and diesel supplied into the tanks of vehicles”.

Welcome to 2008.. better late than never…

Last year BP broke all the rules in South Africa by becoming the first petrol company to officially accept debit cards for petrol purchases at its forecourts.  And now it appears that Shell is following suit, also accepting debit cards at its forecourts for fuel purchases.

Well done, it’s about damn time.

Foreigners might think that this is totally ridiculous, but the truth is that here in SA the Department of Mineral and Energy Affairs (DME) still enforces a number of horribly draconian and out-dated laws that have been in placesince the sactiona levied against the country in the 1960s as a result of Apartheid.

These don’t only pertain to the cost of a litre of petrol or diesel, but also prohibits the use of credit cards and, until recently, debit cards for fuel purchases.

The rules set out by the DME have been interpreted fairly literally but it is clear that a change in the regulations is overdue in order for the country to move with the times.

According to the DME, fuel may not be sold on credit, the purchase of fuel may not be incentivised by the retailer and the cost per litre of fuel may not be discounted, under any circumstances.

Therefore, allowing consumers to purchase fuel using any means other than cash, cheque or garage card is considered illegal if the regulations are interpreted strictly.

It could be argued that these markets all operate in a free market where the fuel prices are

not regulated by the state and a more modern set of rules regulate the fuel industry.

But, even in heavily regulated markets, Malaysia for example, debit cards are widely accepted for fuel payments.

With the increasing risk associated with accepting and handling vast amounts of cash, and rampant fraud around insecure, signature-based garage cards, forecourt owners are desperate to find alternative ways to accept payment for fuel.

Garage cards, which are more convenient than cash in most instances, serve as the “card payment alternative” for fuel in South Africa.

But, as mentioned before, they are easily stolen or lost and signatures can be forged and transactions are not always concluded online, leaving both the responsible retailer and the affected consumer with little chance to avoid the possibility of fraud.

In addition, the concept of garage cards adds no value to consumers at all. Garage cards are generally linked to some sort of credit card account, which in itself is an ironic contravention of the regulations set out by the DME that retailers may not sell fuel on credit.

They generally also carry an annual card fee and interest is changed on fuel transactions from day-one, in exactly the same way that credit card cash withdrawals are.

Similarly, the fees attracted by swiping a debit card can be much lower than swiping a garage card in some instances, and are definitely lower than the fees charged for drawing cash.

So, not only are garage cards essentially a duplicate product taking up space in a consumer’s wallet or purse, they also cost the user a lot more in fees.

All I can say is well done to BP and Shell for taking the first steps and embracing the 21st century.  Goodness knows, companies like Sasol, which quite prominently display huge signs to the effect of: “Debit cards are NOT accepted for fuel purchases”, can learn a lot from compnies like BP and Shell.