Credit/Debit Cards Will No Longer Acceptable On Fuel Pumps

Among a general wave Practically all retail locations of oil marketing Companies have abandoned accepting credit and debit card payments for the purchase of gasoline and diesel due to the high merchant discount rate (MDR) of 1.5% that commercial banks are now charging.
As a result, customers are now much more miserable since they are forced to pay cash for petrol.

According to an OMC representative who spoke to a national publication, banks would deduct 3.45 Pakistani rupees in MDR from the differential of 3.68 Pakistani rupees per litre for gasoline and diesel whenever the person chooses a credit or debit card to make a purchase. The profitability of OMC could be compromised if this causes the OMC margin to drop to just Rs. 0.23 per litre.

The Representative also stated that the country sold 20 billion litres of Mogas and diesel annually, of which 400 million litres were sold using credit and debit cards. Assuming that the average price of Mogas and fuel was Rs230 per litre, this meant that the value of bank card sales rose to Rs92 billion annually.

He also asserted that instead of receiving money from clients, the bank was making Rs 1.38 billion in MDR from OMC’s margin by charging 1.5% MDR per litre. There is a Rs. 1472 billion profit margin. In this approach, the majority of the investor’s Rs 1,380 billion margins on OMC will be allocated to banks, leaving an estimated Rs 92 million in net margin. Because of this, OMC was unable to use his net profit of Rs 92 million to keep running his petrol sales business.

On August 22, 2022, the State Bank of Pakistan (SBP) received a letter from the Oil Companies Advisory Council (OCAC) addressing the problem of banks charging higher MDR.

According to the letter, OCAC advocated for the OMC and called on the central bank to support a review of the 1.5% MDR rate for fuel purchases with credit or debit cards. The MDR varies by industry, but it is claimed that banks charge this rate on average at gas stations nationwide, with OMC and its dealers (gas pump owners and operators) being responsible for payment. The letter further points out that the Pakistani government regulates fuel prices (motor gasoline and diesel), including OMC and dealer margins, and that margins are set on an absolute basis rather than as a percentage of the final selling price. The letter also states OMC’s margin to MS. That’s 3.69 per litre and he’s 1.51% of the price, and the same applies to diesel. Also, the petrol and diesel dealer’s profit is Rs 7 per litre 2.99% for Diesel and 2.86% for Petrol.

The OCAC further noted in its letter that, despite rising gasoline prices, OMCs’ margins are extremely low and that, unlike companies in other industries, OMCs are unable to pass costs on to customers because Pakistani government regulations on margins prevent them from doing so. The oil industry is aware of the need to improve the nation’s digital payment infrastructure, and the MDR of 1.5 per cent that banks are currently charging on fuel transactions is eating into the gross profits of the OMCs and their dealers. Moreover, the market cannot sustain the current level of MDR being charged on fuel transactions.

The OCAC suggested to the SBP governor that MDR on fuel purchases be regulated at 0.3 per cent to ease customer concerns, avoid burdening OMCs and dealers, and take into account the fast turnover of fuel Cause banks are getting Rs3.45 in the form of MDR from our margin of Rs3.68 on a liter of gasoline and diesel when a consumer purchases them using a credit or debit card. This is how the margin gets squeezed to just Rs0.23 per liter making the financial health of OMCs more vulnerable. It is important to note that there are far fewer OMC filling stations than there is private dealer filling stations.

So, is this all system forcing us to shift on Ev’s (Electric Vehicles)?

Electric cars will probably be a big threat to the businesses of Local Petrol pump owners cause electric cars also be charged at home, and in future, most consumers will shift to EVs but sadly future is a little far.

Yeah we all know that day by day Running Gasoline powered vehicles isn’t only getting out of our hands it’s also getting tougher because of these local vendors, Maybe because the future of EVs (Electric Vehicles) is not only Even near instead because of Profit mafia’s behaviour Which is forcing us to shift on to electric vehicles from gasoline-powered vehicles, In my point of view because of their instant profit Strategy they are trying to kill their businesses
Because Evs (Electric Vehicles) are not even on initial stages in Future but EV industry will rise gradually as the number of charging stations will rise in the country. Meanwhile, the demand for EVs is rising globally due to the efficiency of EVs (Electric Vehicles) steadily improving day by day, so not only will the demand rise globally, but it will also rise gradually in Pakistan.

Consumers around the country only doubted the EV sector because of the less availability of charging Stations across the country and another main reason is no availability of long-range battery options in local Electric cars in the Pakistani Ev Sector, otherwise, it’s more beneficial for the local everyday person, who is finding it harder and difficult to afford the cost of petroleum-based vehicles. According to analysis, electric vehicles can save up to 50% of the costs of petroleum-based vehicles. An average small electric vehicle with a range of up to 230 km to 250 km can cost between 1200 Rs to 1500 Rs. The average fuel tank of a small car is between 27 litres and 35 liters.

It can cost you around 7000 PkR to fill up a 30-liters tank here in September 2022 at the price of 233 Rs. per liter. This barely covers 400 km per tank and is a bit more expensive than even Larger cars, like available Sub Compact Electric SUVs in our country, which may provide up to 12 kilometers per unit, which is between 20 Pakistani Rupee to 30 Pakistani Rupees.

Only the availability of an Extended long-range battery option in local cars can drastically increase the new consumers, Since the little demand has also risen in Pakistan in the past years for Evs Market Cause in my point of view sales of electric vehicles might rise by up to 45% by 2028 and 60% by 2035.