FBO Success: Negotiate Credit Card Processing Fees for a Better Fuel Supplier Agreement
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An often-overlooked element in developing a better fuel supplier agreement is the ability to negotiate favorable credit card processing fees. If you want to have a tangible impact on your bottom line, watching your credit card processing fees is a sure bet.
When you sit down with your fuel supplier to discuss your agreement, a list of fees for various credit cards will be detailed. This includes fees for Visa, MasterCard, American Express and Discover among others. Please note that these fees are negotiable.
In addition, the fuel supplier often has their own branded retail card which generally is a no-fee card. It is important to confirm this in your agreement.
Tip 1:
Ask for the ‘no-fee’ card. A strategy to help put more money to your bottom line is to train your CSR staff to ask for the ‘no-fee’ fuel supplier branded card first. If the customer does not have this card, the CSR staff should know the rates of the other cards accepted, and ask for the next lowest fee card.
Remember, every dollar saved on credit card fees it is like finding free money in your old couch. And in the case of large fuel sales, this is not chump change. The money saved goes straight to your bottom line.
Tip 2:
Charge back the credit card processing fee to your customer if laws in your state allow. Most states allow businesses to charge back credit card fees and customers/consumers are used to seeing this in some form or another. Hotels are charging resort fees, some restaurants are charging service fees (a form of credit card fee recovery) as well as a labor recovery fee. Many gas stations across the country post a higher price for using a credit card.
Aviation fuel sales are generally large value sales and a credit card fee for a 500-gallon sale, for example, can be $70 to $80. Charge the fee back as part of the customer’s invoice. Same for your maintenance business.
Tip 3:
Establish your own fuel discount program. As we all know, FBOs do not sell that many gallons at the posted retail price. Therefore, empower your CSR staff to offer a pre-determined discount when pilots request a negotiated discount.
When dealing with contract fuel customers, the main benefit of using contract fuel processing is that there is no credit fee and payment is made promptly. The downside is that you are providing a decreased into-plane fee. Our advice is to keep vigilant on the into-plane fees and adjust your fees to maximize profit, not necessarily maximize gallons sold. Minimize discounts to recover these costs.
As we teach in our segment on Negotiating Fuel Supplier Agreements at our NATA FBO Success Seminar, credit card fees are discussed in depth as well a fuel pricing strategies, contract fuel pricing, pricing theory and how these issues affect your business. In our next blog post, we’ll examine the last element in developing a favorable fuel supplier agreement: contract fuel programs.
ABOUT THE BLOGGERS: John Enticknap (404-867-5518) has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH Accredited auditor. Ron Jackson (972-979-6566) is co-founder of Aviation Business Strategies Group (ABSG) and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training.
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