EL DORADO, Ark. -- Despite Murphy Oil USA Inc.'s atypical fuel-heavy, convenience store-light retail approach, there is one area in which it shares other convenience retailers' pain: credit-card transactions. Because it has no margin-heavy foodservice program to fall back on, Murphy Oil is exposed to the costs of accepting plastic as payment perhaps more than the average retailer. In the process, it has taken some steps to protect itself.
In January 2007, Murphy implemented a driver's-license automated clearing house (ACH) payment system, and in February 2008, the company announced it [image-nocss] was no longer accepting American Express cards as a form of payment.
"Those weren't profitable customers to us," Paul Wells, vice president of retail operations for Murphy Oil USA Inc., El Dorado, Ark., told CSP Daily News. "We sometimes lost money on those transactions. For us, just like everybody else, credit-card customers are the least-profitable customers we have out there. And it's a big problem, the credit-card fees. So we have to work at different ways to keep those fees as low as possible, and encourage those people to use other payment types."
Because many of its sites are located in smaller, rural areas, Murphy is one of the few retailers that still accept checks as a payment form; it 's also a less-expensive transaction for them than plastic.
But perhaps a tougher nut for Murphy to crack is credit-card fraud. Fraud has ballooned into a massive issue, particularly in the company's Gulf Coast markets, costing it a hefty sum in chargebacks each year, Wells said. Despite efforts at the retail site to prevent fraud—instituting security-number prompts at the pump, velocity checks, etc.—the problem persists.
"What we've found is, it doesn't work. The bad guys have the [security] number, they have your ZIP code, your mother 's maiden name," said Wells. "We've got 550 cards that we confiscated that have all the information you can want. And credit-card companies are passing all of those chargebacks to us, on top of the fees, without giving us support to address the issue."
"What are they doing to protect that credit-card data in the first place?" he continued. "How did that data get to the bad guys? PCI (payment card industry) compliance is such a huge issue at NACStech, and we're paying all of these fees to the credit-card companies, and what are they doing for those fees?"
It's a multichannel plague that Wells considers just as bad—or worse—than credit-card fees, and Murphy Oil would happily join other retailers in forming a coalition to combat the problem.
Editor's Note: For an in-depth look at Murphy Oil and its intense focus on fuel, watch for the July issue of CSP magazine.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.