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Article published in Issue Number: 070202

Petro prospecting

By Dee Karawadra, Impact PaySystem

The petroleum market is heating up. And if you're a merchant level salesperson (MLS) breaking into this sphere, you're on the way to adding big bucks to your residual stream.

According to the National Association of Convenience Stores, the increase in average U.S. gas prices from 2003 to 2004 - from $1.55 to $1.83 per gallon - led to a significant increase in the use of plastic at the pump.

Fifty-four percent of gasoline customers paid with plastic in 2004. And the continued increase in gas prices in 2005 and 2006 accelerated that trend. The petroleum market, which began as a cash-only business, has rapidly converted to electronic payments both at the pump and inside the store.

According to a Dove Consulting/American Bankers Association study, Americans made 52% of all their purchases with debit and credit cards in 2003. It was the first year more in-store payments were made electronically than with cash or checks.

This steady rise in electronic payments continues, giving merchant service providers great opportunities. The biggest challenge for MLSs is to obtain merchant accounts in the independent gas station market.

The players

Mastering the art of prospecting independent gas stations requires a networking kaleidoscope. It is essential to befriend jobbers, pump maintenance companies, grocery providers and oil marketers' associations.

In the petroleum industry, jobbers supply fuel to retail facilities. Pump maintenance companies provide service to gas pump hardware. Grocery providers offer food and convenience items to gas stations for inside sales. And oil marketers' associations consist of jobbers and gas station owners.

Here's some advice on how to approach these four important industry segments:


An independent gas station's most important relationship is with its jobber. But it's usually of the love-hate kind. The jobber holds a precious resource - gas. The merchant needs gas to attract customers.

Jobbers typically refer or mandate the use of certain credit card processors to their petroleum stations. They also apply credit card deposit funds toward gas station fuel purchases.

Jobbers expect to receive residual or referral fees for business they refer. If a jobber is not already working with a processor, it will be extremely receptive to establishing a referral arrangement. This presents an opportunity for MLSs.

You will be rewarded handsomely if a jobber agrees to refer unbranded service stations to you for bankcard processing. And if you agree to refer independent stations to the jobber for gas.

Once you have established this relationship, it is crucial to honor your agreement. If you promise a referral fee, pay it in full and on time. As your jobber's business grows, so will yours.

Pump maintenance contractors

Pump maintenance companies contract with service stations to maintain gas pumps. If a station makes a processing switch, the pump maintenance contractor does the reprogramming. Pump contractors also install pumps at new stations.

Many newly installed merchants ask their pump contractors for bankcard processing referrals. Thus, these contractors are a fertile referral source for MLSs.

Approach contractors in your area with referral proposals. Their main priority is an easy setup for station owners. If you can provide this, they will be more than willing to refer your services.

If they encounter a download issue, you will need to be available to remedy the situation as soon as possible.

The contractor will also appreciate installation, reprogramming and maintenance referrals when you sign new petroleum merchants. This reciprocity will help you build a strong foundation in the business. It is a win-win for both parties.

Grocery wholesalers

Gas station convenience stores depend on grocery wholesalers as a reliable source of food and retail merchandise. Often stations purchase groceries on credit. This arrangement can "encourage" station owners to act on referrals given by wholesalers.

It is customary for MLSs to pay grocery wholesalers a flat fee or small residual for processing business the wholesaler refers. Again, keep it reciprocal and refer your petroleum merchants to the wholesaler.

Building strong relationships that benefit all parties involved is the key to success.

Oil marketers' associations

Members of oil marketers' associations include jobbers and petroleum retailers. These organizations are set up at local, regional and national levels. They work to maximize their market share and negotiate contracts with vendors, based on group size.

Associations pose an excellent networking opportunity for MLSs. Price is paramount for this group when choosing referral partners.

But service is also important. Initially, associations may be reluctant to sign a contract. However, once you demonstrate your service levels and support, they will easily oblige.

These groups will expect residual or referral fees for sending business your way. They generally use the funds for marketing.

They will also allow you to present your products and services at their quarterly and annual meetings. Once your relationship is well-established, an association may even release its membership list to you.

Being an oil marketers' association's preferred provider will give you a perfect introduction to petroleum merchants. Again, relationships are key.

Build a strong, mutually beneficial arrangement that will take both you and your association partner to the next level.

Prospecting for petro takes time and effort; but once you begin, it will snowball. I hope this gives you a road map for your journey into this market. Do not hesitate to call or e-mail me if you have any questions.

Dee Karawadra is the Founder, Chief Executive Officer and President of Impact PaySystem based in Memphis, Tenn. He and his team have a wealth of knowledge on the merchant services industry, with a niche in the petroleum market. Dee's experience on the street as an agent has guided him in laying a foundation for an agent program that is both straightforward and lucrative for his agents. Contact him at 877-251-0778 or

Article published in issue number 070202

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