Welcome to the No-Margin-for-Error Zone

It’s official, today’s tumultuous market conditions are beyond challenging for Fuel Dealers, as they must execute all aspects of their business with supreme precision in order to survive and thrive. The rules have changed as we’ve reached a unique crossroads with no margin for error. Utilizing technology to help run the business more effectively is paramount as some expenses are 50-100% higher than 18 months ago. 

It’s been said that  “the only constant in life is change”  and, the past few years, we’ve had plenty.

On both personal and business levels, Covid-19 turned the world upside down, forcing us to rethink virtually everything we do and how we do it. Lockdowns imposed unimaginable challenges on our processes. I can not think of any business that had immunity.

Fast forward to today: Retail  fuel dealers are staring down the barrel of $6 a gallon heating  oil. Notwithstanding the optics of having to sell your product at 100 percent more than normal, this has far reaching implications and ripple effects for fuel dealers nationwide. The perseverance of our industry to continuously overcome adversity and the ability to continue servicing the public is admirable.

Make no mistake: This is a Triathlon. You need to fine tune your strategies across the board, and your payments strategy in this case is a critical one sincefees are tied to volume.

Customers’ behavior is subject to rising prices. They often find themselves having to change their purchasing decisions. They have to modify their behavior, and so do you.

Higher prices tend to result in so-called “Demand Destruction”; consumers consume less product because they simply cannot afford to buy in typical quantities, or they may stop buying the product altogether because an alternative product provides a solution at a lesser cost.  The effects are like ripples in a pond. Sooner or later, they touch everything. They’re touching you right now.

For fuel dealers, be they heating oil or propane or gasoline retailers, higher prices are causing demand destruction, and that impacts the bottom line.

Rising cost of goods eats away at our margins as we struggle with how to mitigate the math associated with replacement costs. That impacts the bottom line.

The consumer is squeezed to afford the cost of filling their tanks, while Retailers’ lines of credit are maxed out in many cases in an effort to keep supply on hand. In addition, high retail fuel prices translate to more processing expenses, which eats up your margin.

Every fuel dealer needs to be looking at their payment acceptance strategies and gravitate customers (and their company) to the cost effective payment options that are most friendly to their respective bottom lines. 

With heating oil at $6 a gallon, a delivery of 200 gallons will cost the consumer $1200. Depending on which payment methods are offered and utilized by the consumer, that transaction will cost you anywhere from $3 to $30 (and that’s just one transaction). Yes, unfriendly payment options can cost you ten times as much,  wreaking havoc on your bottom line and eating up your well earned profitability.

Using Visa Credit translates to big  fees that, one way or the other, you or your customer must pay. I can’t stress enough how important it is to work with a payment professional who can help you interpret this and support you in your efforts to maneuver the minefield of credit card processing interchange fees. 

In March of 2021, EIA reported  heating oil nationwide began flirting with the $3-a-gallon mark. At $3 a gallon, that customer transaction for $600 for 200 gallons of fuel (using Visa Credit) generated substantial fees that you or your customer had to pay.

The good news is,utilizing debit (any card brand) and Echeck/ACH will be a huge help. In addition, lean towards Mastercard and Discover credit cards as those options are utility friendly.

It’s not a heavy lift and telling your customers about it puts you in a very positive light as cost reductions help you pass on better value to them.

It’s a new world and only the strong will survive, but those paying attention and leveraging technology will thrive by capturing perpetual and essential cost savings, which benefit the bottom line.—Larry Richmond

Larry Richmond is president of payments processors Richmond Financial Services

(www.richmondfs.com). He can be reached at 617-843-5700 x200 or by email at


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