The first-time tourist to South Africa, filling up his hired car with petrol, greets with astonishment the news that he cannot pay with his credit card.
South Africa is a rarity in the world in forbidding purchases of petrol on credit. This stems from a law passed in the early 1980s which decreed that petrol could not be bought on tick because it is a strategic commodity.
According to a Standard Bank spokesman, this forced the banks to look for alternative solutions. They came up with the garage or petrol card the branding differs from one bank to another.
Garage/petrol cards are debit cards for the purposes of petrol purchases, so you get charged interest from the day you make your petrol purchase.
But some of the banks offer money saving solutions to this problem. For example, you can link your garage/petrol card to your cheque account and arrange to have transactions settled immediately by a transfer from your cheque account. If you keep your cheque account in credit, you will save interest.
Another option is to keep a credit balance in your garage card so every petrol purchase reduces the balance but you earn interest on the money sitting on the card in the meantime.
On garage/petrol cards, unlike credit cards, you also normally pay a transaction fee, whether you are in credit or debit, but, at some banks, if you have your petrol card linked to your cheque account and have negotiated with your bank that you pay no fees, then you will not pay this transaction fee.
A spokesperson for the Absa Group said another reason for garage/petrol cards is that because profit margins on petrol sales are relatively small, petrol merchants are reluctant to pay the handling fee on credit cards which ranges between two and 7,5 percent of the value of the transaction. So in the case of petrol purchases, the purchaser pays the costs of administration to the bank.
However, if you use your garage/petrol card for buying spares or servicing your vehicle, the merchant pays the costs and you do not pay the transaction charge.
Some of the banks have formed alliances with petrol groups so that you will find their ATMs on the forecourts of the station and in some cases can pay for petrol by using your ATM card, rather than using a garage card. For example, Absa clients can use their ATM cards to buy petrol at Caltex petrol stations. Standard Bank has arrangements with certain Shell and Caltex stations where you can use your ATM card.
Other banks, such as First National Bank, are holding off because smart cards are rapidly coming on line and these will act mainly as debit cards for a variety of uses where merchants, including petrol stations, have suitable card readers.
With changes currently under way in the fuel industry, including the abolition of Sasol's subsidy, South Africans may hope that the ruling on buying petrol on credit will be reviewed.
The Standard Bank spokesman said even if the petrol industry were fully deregulated, Standard Bank still believes there will have to be a product for customers who want to keep their petrol expenditure separate for example, those who claim business travel expenses for tax purposes.
"We would be delighted if foreign visitors were able to pay for petrol with their credit cards, but this service cannot be offered until the law is changed," Absa said.