Written on: August 9, 2021 by Larry Richmond
Having personally spent the greater part of the last 20 years directly communicating with credit card brands on behalf of the Heating Fuels Industry, I am not happy with the recent and unfortunate increase in Visa Credit rates. Not only is this increase detrimental to the industry, it eats into the hard-earned profits that you work for each and every day by providing your customers important essential services, comfort and peace of mind.
Your customers have grown to trust you over the years—the late-night emergency service calls certainly illustrate the type of responsiveness that a customer could only hope for from another service provider.
For greater perspective, just think about the vast differences between the multi-generational Heating Fuels Industry compared to the conglomerate utility companies that trade on the New York Stock Exchange. This industry is different; it focuses on individual customers and cares about their immediate needs. This is where “Big Business” drops the ball; their priorities are the investors and shareholders of the company who are forcing the majority of publicly traded companies to look at daily operations and overall priorities differently.
There was a time when good service and pride was a required prerequisite of most companies, both large and small. However, the landscape has drastically changed, compounded by advancements in technology, access to data and greater transparency. It is intimidating enough to compete in today’s world, but throw all of these additional obstacles into the mix and it’s daunting.
From a competitive vantage point, there is no question that “Big Business” can utilize its resources to help tip the scales in its favor and win market share.
This Heating Fuels Industry is made up of thousands of family-run businesses that now, more than ever, need to think creatively to complete in an environment with the odds inherently stacked against them.
When it comes to electronic payments, all four major brands (Visa, MasterCard, Discover and American Express) are publicly traded companies that operate around the globe. As mentioned above, they have a lot to prove as they all trade in the public markets, where good news and big profits are constantly on display for stockholders and investors
In April of this year, the payment landscape drastically changed for the worse for Heating Fuels dealers operating in the U.S. After more than 15 years, they are no longer eligible to participate in a reduced Visa Credit interchange category, resulting in a significant increase in fees the likes of which this industry has never seen before. To further compound the issue, in conjunction with the elimination of the discounted program for Fuel Dealers, Visa simultaneously released its largest general rate increase in the last 25+ years, magnifying the processing expenses associated with accepting Visa credit cards. To make it worse, consumer Visa credit cards represent the largest pool of card types in the marketplace.
To illustrate what this really means for the average Fuel Dealer accepting consumer Visa credit cards—it will cost them an additional $3.00 per transaction based on an average transaction size of $400. What cost dealers approximately $6.00 on April 1 today costs them roughly $9.00 for accepting the very same card. It should be noted that $6.00 was almost three times the cost of running a MasterCard or Discover credit card, and that was before the huge increase to $9.00.
It is unfathomable to simply accept this as the new norm. This industry cannot just “take it on the chin” because big business needs to report larger earnings to Wall Street.
The time has come for the heating fuels industry to be innovative and approach these rate increases in a strategic, creative manner. Embrace it as an opportunity to engage with customers, build loyalty and add value that truly differentiates you from your competition.
It is no easy task, but if handled properly, the byproducts of executing a well thought-out plan will yield dividends to your organizations and the entire industry. Let us once again come together and rise above the tsunami of big business. ICM
Larry Richmond, is a Cashflow Automation Specialist and President of Richmond Financial Services (RFS). In 2005, Richmond successfully lobbied MasterCard to reclassify home heating retailers into the lower risk utility processing category resulting in billions of dollars of savings to the industry. Contact Richmond at 617-843-5700 x200 or by email at larry@richmondfs.com
