Financial service providers in South Africa such as banks can help bring down fuel prices by a noticeable margin by reducing or dropping the transactional fees they charge station owners.
This is the view of Professor Jannie Rossouw from Wits Business School, who said that station owners currently owe banks around 40c/litre every time customers pay for fuel using their credit cards.
“The one element in the fuel price that is not often discussed is the cost that filling station owners have to pay to the financial services industry when members of the public use their credit cards to pay for fuel. At the moment, the cost going from filling station owners to the financial services industry on credit card transactions amounts to about 40c per litre on every petrol or diesel transaction,” Rossouw told eNCA.
“So, if we can get the financial services industry to reduce that levy of about 40c per litre, it would help to get the fuel price lower in South Africa.”
Government is in control
While the banking industry can assist in bringing down fuel rates, Rossouw contends that one of the biggest drivers behind the elevated fuel prices we are currently experiencing, which is a weakening rand, is under the control of government and can be addressed in several ways.
“The problem with the fuel price in South Africa [is] a weak rand and a high international oil price,” said the professor.
“The high international oil prices [are] not under South Africa’s control, the weak rand [is] under our control.”
A growing economy stimulated by better government policies that attract foreign investment is the most practical way to strengthen the rand against major international currencies.
Implementing such legislation will lower the rates we pay for oil as this is currently determined by the US dollar, and in turn, the prices motorists see at the pumps.
Furthermore, recovering the country’s dilapidated rail network will go a long way in reducing the reliance on trucks that run on diesel to transport goods across the nine provinces, which will have a positive knock-on effect on demand for this fuel type as well as the cost of food, clothing, medicine, and other necessary items in South Africa.
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