Thursday, 26 June 2014

Fuel Card debate

(First appeared in Consumer News Namibia Magazine April 2013)

On 12 April 2010, the Bank of Namibia announced that “..As part the Namibian payment system reform initiative of which the implementation of the local card switch, NAMSWITCH, has been one of the milestones, the Namibian banking industry resolved to discontinue petrol cards in Namibia in the near future. The public will instead be allowed to purchase fuel with internationally accepted debit and credit cards. The Payment Association of Namibia (PAN) wishes to inform the public that they can use their debit and credit cards to purchase fuel at Filling Stations.
These developments are good steps in the right direction for consumers, for fuel retailers, and for the country as a whole. The use of broader range of payment instruments at Fuel Stations provide consumers with choices of which payment instrument to use and as such eliminate cash based transactions in favour of a more convenient, secure and cost-effective method of payment.

At the time the announcement was made, it was understood by consumer groups to be a good thing as it would widen the choices of payment methods by consumers. For once it seemed that the banking industry was thinking of the consumer first.

Two years down the line and the Bank of Namibia informed the public that “..that fuel cards (Garage and Petro) will no longer be accepted  as a legal tender after 28 February 2014.  After this date clients will be able to purchase fuel with cash, debit or credit cards. Clients should note that fuel stations are not obliged to accept debit or credit cards for purchases.”  
It was that last sentence that had some of the consumer groups contact the Association of Service Station Owners (ASSO). After all, why would a fuel station refuse to get paid for fuel?

The ASSO then pointed out that when using a debit or a credit card, one and a half percent goes to the bank, which it takes from the 77 cents profit. Further, service stations may not charge a client any surcharge fee for a point-of-sale transaction for fuel with a credit or debit card. In fact, banks have asked its clients to contact them should a service station charge an additional fee for the transaction.

Since the 28th of February 2014, many fuel stations are turning away all customers that want to use cards to purchase fuel. This has led to many consumer now having to carry the cash around in their pockets for this vital product needed in our daily lives.

So what must be done? The Bank of Namibia and the Payments Association of Namibia (PAN) assured the public in April 2010 that “…these developments are good steps in the right direction for consumers, for fuel retailers, and for the country as a whole.”

This is not the case! Consumers and fuel retailers are being inconvenienced, and these measures also increase the profits of the bankers. They – the bankers - have changed the terms and conditions of how we pay and increased their profit margin while pretending that this is to our benefit.

It is clear that the Namibia Competition Commission (NCC) must become involved in this debate. Consumer groups welcome the fact that the NCC is “highly concerned” that the decision has indeed led to constraining consumers in their method of choice to settle an applicable transaction.

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