Shell Oil Co. announced yesterday that it will accept the credit cards of other oil companies for payments at Shell stations east of the Rockies, bucking the industry trend away from credit to cash.
Shell's move is the latest skirmish in the gasoline wars between oil companies seeking to capture a larger share of the shrinking gasoline market. In recent months, other oil companies have begun to offer discounts of 3 to 4 percent for cash payment in an attempt to lure customers. The discount approximates the additional costs of processing credit card payments, according to the companies. One company, Atlantic Richfield Co., increased revenues dramatically after it eliminated credit cards altogether.
"Shell is concerned about the rising cost of providing credit, but we also have to consider the basic marketing reality that a large segment of the driving public wants the convenience and safety provided by credit cards," said W. J. Bittles Jr., Shell's vice president for retail sales.
By emphasizing credit card purchases, Shell hopes to attract customers away from Arco, Exxon, Amoco, Texaco, Mobil and other companies, which are de-emphasizing them. In a Shell advertisement -- part of an aggressive campaign that begins today -- a pair of hands does card tricks with those companies' credit cards.
"Buying gasoline on a credit card can be confusing these days," a voice says in the background of the television advertisement. Shell, however, is extolled as the place "where you pay the same price, cash or credit."
Customers who use their other credit cards at Shell will be billed by Shell. When a customer hands a participating dealer another credit card, the dealer will hand the customer an application for a Shell credit account. Shell has approximately 5.4 million credit accounts now.
The program is focused on the area east of the Rocky Mountains because that is the area in which most of the cash discount programs are operating, a Shell spokesman said. The program will operate through November 30.
Bittles said that Shell "will evaluate the results of its current program very carefully while continuing to monitor and respond to competitive conditions in all of our markets."
Last year, Texaco announced that it would charge dealers a three percent processing fee for credit card sales. Then, in April, Arco became the first major oil company to eliminate credit card operations entirely. Arco said recently that revenues have increased by more than 50 percent since they took the action. Shell said yesterday that they picked up 250,000 cardholders from Arco.
Maryland's General Assembly passed a law in its most recent legislative session that prohibits oil companies from assessing dealer credit card fees if it imposes finance charges on credit cards. As a result, Amoco Oil Co. said yesterday that it is revoking revolving charge privileges in Maryland as a trade-off for a "discount for cash" program that began Monday.
Exxon, Gulf, Phillips, Mobil, Texon and Amoco all impose fees in at least some markets to encourage dealers to offer discounts for cash.