The Petrol Dealers Association of Malaysia is once again bringing up something they have brought up back in 2005: credit card commissions that are eating into their profit margins. They have issued a letter to all of its member petrol stations asking them to stop accepting credit card payments and diesel subsidy cards for fuel from yesterday onwards.
The government will be meeting with PDAM on the issue of increasing commission charges from 3% to 6% for fuel paid via credit cards. The PDAM currently makes 3% from each litre of petrol. If payment is via credit card, PDAM has to pay 1% to the bank, which reduces the profit from 3% to 2%, which they say is hurting their profits especially in this age where motorists are reducing their petrol usage.
What I do not understand is why the proposed new 6% profit margin for credit card usage instead of just 4% (which is 3% and the additional 1% bank charges)? Where is the justification of the additional 2%? I am not 100% sure if my calculation is right, but an increase of commission charges to 6% would result in RON97 fuel being priced at RM2.781 if paid via credit card, while remaining at RM2.70 if paid via cash.
UPDATE: According to this report by the Malay Mail, the 1% credit card commission charge currently accounts for an average of between RM6,000 to RM20,000 per month per petrol station. An increase of commission to 6% would mean extra profit of between RM18,000 to RM60,000 per month for each petrol station.
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malaysians should stop buying petrol or diesel just for a day..this will ought to teach them a lesson..i noe it sounds very impractical but these morons need to be taught a lesson..or all malaysians go to the pump and insist on paying via credit card only…they can’t dictate our mode of payment.
Sorry ragnahse, It is impractical. As it stands we only buy fuel maybe every 3 days depending on our usage.
In any case, PDAM should stop whining. Credit card pruchases means speedier transactions and convenience for the CUSTOMERS.
It also reduces the dealer’s cash holding, a passive security measure in hold-ups et cetera.
And with a tankful costing hundreds these days, its just not practical to carry money. Here we are trying to develop a cash free transaction scenario, and these PDAM crybabies are trying to put their CUSTOMERS at ransom and decline credit sales. IDIOTIC.
What about tourists? They’d rather use credit I’m sure instead of using their cash for petrol.
And Paul is right. If the cost is 1%, why ask for 6%? Greed?
Cool la bro. U still did not get the real picture here. First the petrol hike, then come the $625 payment upon vehicle below 2Kcc, then Our Sabah friend complain about it, and now the PDAM ask for increase commission.
It’s all about money they ask from the Government. This G is weak and in deep sh*t condition, where they can’t even handle their own implementation and now resulting being challenge by others. Whichever side wins, the citizens are the one that suffers.
I’ll say there will be few more come lining up to ask money from the G.
I’m fine if they want it to be paid cash, but don’t later news come out that petrol station is being targeted by robbery then resulting more regulations being made.
Stop buying for one day would not hurt them much. As they understand that cars eventually need petrol one day when it finish.
If you are unable to maintain/sustain a profitable business, might as well you pull out.
The petrol station owners are just greedy for profit. This should be a matter between the Banks and the Petrol Station owners and threatening the consumer will not get them anywhere.
If x petrol station dun accept CC. the consumer will go to station Y. If Banks are the ones that should be reducing their rates and I believe PDAM is just using the consumer as a way to pressure the Banks to reduce their rates.
Geeshh….If it was that easy to make more money, anyone would have done that.
BTW, PT, I believe the price would not increase but the 6% will be borned by the govt or the banks between themselves. If the petrol price increase again because of this, i think we will all won’t be driving to work. I doubt even the incompetent govt won’t allow that to happen. (I sincerely believe and pray everyday).
G asked them selfservice but these idiot still hire foreign worker to just stand at pump and now want to increase profit due to LESS CUSTOMER!. Btw agree with mokhkf82…current G IS WEAK.
they got all those bangla’s and still blaming at the operation cost. 1 finger pointing at others, the other 4 pointing at those station owners.
G said last time to taxi drivers and bus drivers to cut their own costs.
So PDAM, cut your costs lah.
I want an Electric Car……no visit petrol station anymore, but sure expensive..
so definately the different will be borne by the G either it is 3% or 6% . This is what we called a SUBSIDY…out of 30 cents that the G already have to pay on the product and now also the operating cost. Don’t know what will happen if the business no longer controll by the G? Would all the 3500 dealer managed to survived.
Skrew up malaysia………………skrew up country……….never think of those whether could afford the increase in petrol…………and petronas suxx….
screw up country
Hi Paul, just dropping by.
I don’t know whether this point been brought up before.
Since their earning are based on a percentage of the values of the petrol they sold, I don’t see how it will affect them with the recent increases in petrol price.
Because, although the volume (number of litres) of petrol sold might have dropped a little, the value of them might have risen instead due to the recent massive increase of petrol of 40%. Unless their volume drop by 40%, I don’t see how they would be earning less now than before. In fact, if the volume stays the same because there are people/places where car travel is a necessity, they could be raking in 40% more profits!Do I make sense?
If they are using the case of drop in demand as a case for their price increase, it will be a very weak case, IMHO.
They should’ve argued their case differently.
I have a question here,if you have time.
If I buy petrol in Malaysia using plastics, do I get less petrol than if I pay by cash, or the plastics cost has already been absorbed by the petrol dealers?
Keep up the good work!
You guys don’t know what is happening. Petrol dealers have been earning RM0.08/Ltr ever since the petrol price is RM1.92/Ltr and is still earning the same RM 0.08/Ltr for the new RM2.70/Ltr price. Imagine having to put extra 40% in capital but earning the same commission.
Besides, petrol dealers, not PDAM have to pay up the 1% commission to the bank for each credit card transaction. Imagine a motorbike user putting RM5 of petrol and swipe card. 1% goes to to the bank, not to mention telephone bill for credit card transaction over the phone. Dealers end up losing money, not earning less.
So, I think it is quite justifiable for them to demand a bit more commission from the government.
Paul Tan says: Okay, so demanding abit more is one thing, but they are demanding double. Before this hike, RM0.08 out of RM1.92 is about 4.17%.
I think asking for the rate to be revised to 4.17% or 4.5% is okay, but why 6%?
If they don’t want credit card, fine. I hope they’ll be robbed of their cash more often.
Using cashless transaction such as credit card is convenient and secure; the cash will attract robbers especially in this difficult economic situation.
When they have more cash and being robbed more often, hope they’ll remember to blame themselves for being greedy.
i totally agree with xiao_zhai.it’s relevantly true and so clear to see.why are they arguing because of this stupid matter anyway?
According to my sources, PDAM is fighting for an increase in 2 cents of commission but the news are reporting otherwise. The denial of credit card acceptance and shutting down station for a couple of hours are signs of protest. But rumors are rumors, so we’ll have to wait and see.
arissa86,
Bcoz they’re dumb and greedy ?
I’ve see it coming, last week I guess, gas stations in the US had stop allowing credit card purchases. Now we are following them, as I’m posting this comment I heard rumours that petrol stations nationwide are going to stop selling fuel for several days. I don’t know the truth of it but (right now) people are queing up at the stations in my district as well as several others. The panic is on again. Why asking 6% increase? Are they taking advantages of the situation?
stations that don’t want to pay the commission can stop accepting cards.others who are willing to absorb the cost will get more business if they are brave enough to defy PDAM
I see no reason why PDAM should be demanding for a higher commission for the simple reason that sales will inevitably go up because petrol prices have shot up by 40pct. Of course, some will argue that sales will come down due to consumers cutting down on driving etc, but the overall result in value terms the sales volume will increase, therefore, commissions will rise. Whats the problem PDAM? No economist in your association?
I think they also want an increase in their salary, only way to do it is by increasing the surcharge
I’ve had a phone conversation with my source. He says PDAM wants a total increment of 2cents/ltr commission because of the rising fuel price to cope with the massive increase of capital needed and running cost (bear in mind electricity and water tariff is increasing as well).
Secondly, PDAM members do not want to bear the cost of credit card charges, based on the the line that why must the merchants pay for the convenience of the customer? Instead why don’t the customers bear the cost of their conveniences? Of course, this is the dealer’s point of view.
In fact I know a few merchants (like handphone shop or spectacle shop) who ask their customers to bear the interest charged to the merchant if the customers were to use credit card.
This is the downside of people getting more power. Expect more demands and more strikes coming our way.
Ya right. Electricity…water…petrol…what else! They increase the price (any item) due to operation cost increase so what left to us …rakyat malaysia! We got work harder …earn more and more and more…(if we can get more!) But the problem is they all dont want to share the burden…to maintain profit…just increase the price…stupid G.
The petrol stations’ commission is calculated based on litre; not by value.
As the price increase, the absolute profit remains the same but the profit margin reduces.
The petrol station operators also need more money to operate (40-50% more) because they need to purchase the petrol/diesel from oil companies. With such surprise announcement from the government, the operators would definitely need to take additional bank loan/facilities to support the business.
I’m not too sure what’s the actual change demanded but I do agree with Paul that it should only cover the additional costs and maintain the profit margins for the operators.
But the one paying for these should be the oil companies; not the govt. Oil companies have been announcing record profits for the last couple of years. The least they could do is to improve the margins for their petrol station operators.
Whatever the logic presented, one thing rings true. If you use threat then what you are is a weak person.
These PDAM members are just what Malaysia represents: a subsdised society. This subsidised environment is so fake that when such is removed, there is an uproar. Note that inflation in Malaysia is actually double digit sans subsidy. Ask an economist.
While petroleum is a commodity, we treat it as a subsidised item, and this is what happens.
I agree with the comment that if you can’t take the heat, stay out of the kitchen. Those who don’t mind the 1% surcharge for credit transactions (for security, speed and convenience) shall stand to benefit.
And yes, fire those foreigners who sit there and clean my windows. Take the 6 people out of the payroll of a 1 acre station and they’ll save. STOP PUTTING YOUR CUSTOMERS AS YOUR PAWNS and STOP BEING CRYBABIES.
everything raise price…. mmmmmm…… but some didn’t(my place…)
prata are smaller! can’t find any bits of potatoes in its curry anymore..
nasi lemak’s rice had been scooped using smaller bowl and less compact… egg still had yolk but the white part(protien) lost some its volume… guess nowadays egg yolks are larger then white…. even sambal are a bit lesser bcoz chilly are more expensive then ever! Glad that kacang still remain but guess where those ikan bilis had gone??
does anyone notice that there isn’t any price reduction article/advert in newspaper these days… Rice, Petrol, Electricity, Food, Transportation, Paper, Stationery, Air-ticket Fuel Surcharge, Courier charges, Insurance Premium….What else ?
well, all i have to say we sarawakians can’t pump fuel into our cars for 3 or 4 days because the petrol stations are all close because they are on strike… I wonder how am i suppose to go to school like that…
Quote:
“What I do not understand is why the proposed new 6% profit margin for credit card usage instead of just 4% (which is 3% and the additional 1% bank charges)? Where is the justification of the additional 2%? I am not 100% sure if my calculation is right, but an increase of commission charges to 6% would result in RON97 fuel being priced at RM2.781 if paid via credit card, while remaining at RM2.70 if paid via cash.”
Just my two sens here. Someone pls correct me if I am wrong.
The credit card commission of 1% is paid by the petrol dealers to the banks based on the transaction amt. Face it, everytime we use a credit card, there is commission paid to the banks for providing the service. In some cases, the commission is passed on to the consumer. Remember when someone tells you that you need to pay 3% of the transaction amount when u swipe your card?
So…it’s the same here. The petrol dealers pay the bank 1% everytime you swipe, for providing the service. That’s how the bank makes money.
so how do the petrol dealers or any other merchant pays?…where do they get the money??… from their income of course.
Now…to the question of profit margin…well, if the petrol dealers want their commission raised to 6%, let them have it. let the petrol companies and the government sort this because, whatever increase in commission will not be directed to consumers given the current fuel price is subsidised.
however, this will eat into the government’s subsidy allocation as that cost will be transferred to either the petrol companies or the government itself. it will in turn hurt the government’s coffers.
What I totally disagree with is the PDAM’s decision to hold customers, that is US, at ransom everytime they demand something. Its downright disgusting.
Paul Tan says: Eat into subsidy? What are you talking about? What makes you think he is proposing that the government or oil companies take care of the extra 3% they want? You must have missed this report by The Star.
I quote from the article:
To resolve this problem, he (PDAM acting president Abdul Wahid Bidin) proposed that the Government introduces a two-tier pricing system, one for cash sales and other for credit card users.
“The price for using a credit card will be higher and cash sales may be a few sen lower. This would discourage people from using credit cards,†he said.
I think alot of people are barking up the wrong tree. Lets face it, if anybody is to be blamed, it’s the credit card companies themselves.
All this stems from the fact that credit card companies compel merchants to HIDE, yes, to conceal, the fact that each time you swipe your card, you are paying a 1-3% tax. Do you really think merchants absorbe the creditcard fee? No way. Having worked in retail, I can safely assure you that that when setting the retail price for a good, most people do it like this:
Cost of good + overheads + margin + 3% for credit card = retail price
So what if the customer pays cash? 3% bonus profit lah. In a way, credit cards are actually devaluing our cash, and are a cause of inflation.
So instead of yet another round of messing with margins, I for one think that what needs to be done is to undo the MYTH the credit card companies have been maintaining all this while and require ALL merchants (petrol kiosks included) to display seperate prices for cash and card, or cash only. Taking the credit card tax out of the retail price would seriosuly solve alot of problems.
Also as a side note, my understanding of this issue from a first hand account talking to the petrol station owner is that their commission IS NOT A PERCENTAGE, but a FIXED SUM derived from 4% of rm1.98 back in the day. (4% of rm 1.98 is 8 sen) Their beef with this now is that while they are still only getting 8sen/litre, the credit card companies arn’t charging a fixed 2 sen/litre, but 1% of the new price of 2.70 (which is 3 sen) meaning the station owner is facing a 15% reduction in margins.
Greedy people. better go for cash. The bank is the culprit actually. high fees for them. maybe for the 17% increment of their staffs.
if more ppl use cash transaction, then the bangla petrol attendants will also be Security Guards, in case robbery occurs….
pay per use..
we pay 5% tax when we go dining at KFC or even dikayu nasik kandar
and even another 10% for service tax.. when we go to Pizza Hut
we pay extra parking (5%) ticket when we use TnG and certain area
we pay extra (2-3%) also if we buy Hand Phone using Credit Card
We pay RM 1.00 per transaction if u use MEPS
we pay RM2.00 on transaction service if u renew roadtax at Post Office
WE also pay extra when we want to board early using Airasia..
and to mantioned.. Airport tax and fuel surcharge is not include when they promote the low fare..
nobody (seller) want to bear the cost ….
but 6%.. WAY TOO MUCH
but why they heavily promoting the ‘pay at pump’ for credit card? do they trying to attract more credit card users? but why want to discourage people from using credit card now. huh… pening
who promote? Credit Card or Pump Owner?
Sorry, a bit off topic but just a social commentary..
Malaysians.. can’t even stay united over small matters like this..
but whenever its FOOTBALL or other sissy stuff, they are willing to defend their beliefs with their lives!
Can’t you believe that?
What does it takes to make us united?
Another tsunami? Maybe an earthquake? Or massive flood?
yeah that would be nice
Malaysia…..an enigma. Ad hoc solutions for all problems arise. Should I be happy to be Malaysian? Living in this Tanah tumpahnya darah ku…
Somehow the grass is always greener on the other side…
Malaysia…..an enigma. Ad hoc solutions for all problems arise. Should I be happy to be Malaysian? Living in this Tanah tumpahnya darah ku…
Somehow the grass is always greener on the other side.
Malaysia…an enigma. Ad hoc solutions for all problems arise. Should I be happy to be Malaysian? Living in this Tanah tumpahnya darah ku…
Somehow the grass is always greener on the other side…
Bolehland…..an enigma. Ad hoc solutions for all problems arise. Living in this Tanah tumpahnya darah ku…Somehow the grass is always greener on the other side…
Fuck! No wonder I couldn’t use my credit card since yesterday! They told me credit card off-line and blame the card companies!
Hey! Where’s my comment? Put in twice and nothing.