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.