Petrol stations ban credit cards

2008-06-25 09:29

Kuala Lumpur - Some Malaysian petrol stations have stopped accepting credit cards, claiming the 1% commission they pay banks is eating into their profit margins after a recent massive fuel price rise, officials said on Wednesday.

Zulkifli Mokti, vice-president of the Petroleum Dealers Association of Malaysia, said the association has urged all its 3 500 member dealers to reject credit cards.

Association member Roslan Jamaludin said about 400 dealers have heeded the call in the northern part of the country so far. It was not immediately clear what the response was is in other parts of Malaysia.

More than 3 000 of the country's 3 500 petroleum dealers are members of the association.

"The cost of using credit cards is too high now and has created losses in our dealings," Zulkifli said. "I think it's better to accept a backlash from customers than do business and lose everything."

The government increased the price of petrol by 41% and diesel by 63% starting June 5. But because the increase was due to a reduction in government subsidies, the petrol stations' earnings remained the same - since fuel prices are controlled - although their transaction cost went up.

The petrol price shot up to 2.70 ringgit ($0.83) a litre, from 1.92 ringgit ($0.60) a litre. A 1% bank commission on every credit card transactions translates to a much higher amount than before, Zulkifli said.

A station that sells an average of 17 000 litres a day stands to lose about 3 900 ringgit ($1 218) every month on bank commissions if every transaction is by credit card, he said.

- AP