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UKPIA leads call for card cost cuts

01 September, 2004
As fuel sales paid by card continue to increase, UKPIA seeks cuts in Merchant Service Charges
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Chris Hunt - spearheading campaign to cut card costs

A campaign to reduce the impact of credit card Merchant Service Charges on the downstream oil industry is being spearheaded by the UK Petroleum Industry Association.
Director general Chris Hunt will this month meet with representatives of the two main credit schemes – Mastercard and Visa – to present the case for a reduction in MerchantService Charges (MSCs).“It will be a benefit to the whole industry – we are going in to bat for everyone,” he said. “We are going in to present the industry’s case and will hopefully get some positive feedback. Merchant Service Charges have had an increasing impact on the margins of all retailers and we would like to see a significant reduction.”Hunt said the proportion of fuel sales paid by cards had increased rapidly in recent years, and as fuel prices had increased, so had the MSCs levied on the total sale value.“Today more than 75% of the retail price of fuel comprises government fuel excise duty and VAT. Therefore, the great majority of MSC is levied on taxes and not on product price, which puts the oil industry merchants into a unique position in relation to MSC price levels.” Data collected by consultants for UKPIA showed the MSC for a typical credit card purchase represents more than 60% of the gross margin on a litre of petrol.“The average credit car MSC is 1.25%, or around 1ppl at current prices, with the interchange fee comprising about 93% of that figure. This is clearly not sustainable. The introduction of an interchange-specific fee for the oil industry would solve this problem.”