Credit card holders 'being penalised'

Dubai: Consumers say they have been caught in the crossfire of a feud between fuel companies and credit card companies as each party blames the other for failing to agree on who should bear the service charges.

Fuel companies refused to accept popular credit cards and debit cards at their pumps starting Saturday saying they were not willing to bear the cost of an increased service charge levied by credit card companies.

Consumers at petrol stations have since been forced to carry cash or withdraw it from bank machines.

Consumers are the biggest losers in the dispute between credit card companies and fuel companies that has limited their freedom to choose the preferred method of payment, they are complaining.

"What happens if you have a limited salary and use your credit card to pay for petrol? I use my cards in the last 10 days of the month so I don't run out of cash. What am I supposed to do now?" said Raz, a UAE resident.

Moazzam Akhlaq, a Gulf News reader, said the decision to refuse credit and debit cards was "contrary to what the entire world practises". "We all know it is boom time for plastic money. People find it easy and safe to hold multiple credit cards, rather than loading up their wallets with paper money," he said.

Increasing losses

Fuel companies were left with no choice by credit card companies, and were forced to stop accepting credit and debit cards to keep their losses to a minimum, Khalid Hadi, Group Brand and Marketing Manager for Enoc and Eppco, told Gulf News.

"Our losses are in the hundreds of millions of dirhams a year. With the oil price increasing, it doesn't make sense for us to incur losses on both fronts," he said.

The initial decision by fuel companies to pass the entire cost of credit card service charges levied by credit card companies, said Hadi, came as a result of those companies' decision to increase the charges from 1.55 per cent to 1.65 per cent, which fuel companies found to be too high. "It might sound like a small amount but with the number of cars in Dubai increasing by 15 per cent annually, the fee puts a lot of pressure on us," he said.

The credit card companies, he added, opposed fuel companies' decision to pass the cost onto the motorist, and that led the fuel companies to stop accepting credit and debit cards altogether. Visa and MasterCard did not respond to a Gulf News request for a comment.

In a statement issued recently, Denzil Lawson, General Manager of MasterCard Middle East and Levant, said that cardholders were being "penalised" for using their cards.

Kate Dourian, editor of energy information service provider Platts Middle East, told Gulf News that the fixed cost of petrol at low rates in the Gulf region has led fuel companies to look for "any way to keep their losses at a minimum".

Hadi of Enoc and Eppco said that fuel companies have been incurring losses for that reason "for the past seven years", adding that the solutions available are the subsidising of oil or passing the cost onto motorists by "allowing the price of petroleum to fluctuate, as is the case with diesel".