The impact fuel cards can have on margins, explained.

September 1, 2020

EdgePetrol's Data Science Intern, Adriana Kuzmanic explores the current average fuel card fees and the effects this might have on fuel retailers.

EdgeIndex (May 2019) 🎉

Welcome to the second edition of our blog series where over the next three months we will be taking a closer look at “Fuel Cards” and the effect they have on the fuel retail industry.

This month we want to answer the following question:

What are the average fuel card fees?

Why do fuel cards matter?

EdgePetrol provide two types of margin:

  1. Gross margin - the blended cost of your product subtracted from your pole sign price
  2. Net margin - the above with fees for fuel cards applies to each transaction

We have seen that net profit can be largely affected by the fees incurred by fuel card transactions. Whilst your gross margin may be high, fuel card volume can drive your net margin down depending on how often they are used and which cards are accepted.

So, what is it costing me?

Our sample consists of 170 of our stations and 9 brands, which were active during the period of April and May of 2019.

As presented above, the overall average is 3.48ppl net margin impact. The difference between the highest (Routex Bunker) and lowest (Fleet One) average is 7.81ppl.

It is evident that there are 5 fuel cards that are above the average, which are Routex Bunker, Esso Card, Fast Fuel and EuroShell.

Now that we know which fuel cards have the highest average cost to the net margin, let’s take a look at this by brand. These are the average fees paid by stations with the following brands:

As indicated in the table, the overall average cost to net margin of the brands is 3.02ppl with a large difference of 3.52ppl between the highest (BP) and lowest (Jet) fees.

What this data suggests, is that BP and Shell are the brands with the highest average impact from fuel cards on net margin, whilst with Jet and Essar the retailer is maintaining most of the margin for themselves.

Remember to stay updated as our next blog post will discuss the average fill up per Fuel Card and Fuel Grade!