A big step backwards

In announcing the move on Tuesday, President of the TTPDA Robindranath Naraynsingh described the move as a “cost-cutting measure” designed to save jobs.

“Credit cards incur a cost which we cannot pass it on to the customers because the Minister of Energy sets the retail price and the wholesale price of gas,” he said.

The measure appears to relate to all forms of electronic payments, which would include credit and debit card payments.

However, little information has been provided about the proportion of total payments done electronically. While the banking charge on electronic payments ranges from 1.3 per cent to three per cent, we have insufficient knowledge of the books of the members of the Association to be able to gauge whether the move will truly make a difference.

In fact, anecdotal evidence suggests the gas stations may be making it worse.

The payments system in Trinidad and Tobago has undergone significant changes since the year 2000. The use of debit cards has risen steadily.

The crime situation has encouraged retailers to embrace electronic payment options.

These options result in less cash being stored on premises, which is a disincentive for robbers.

By forcing all consumers to pay in cash, the opportunities for miscreants are opened up.

The retailer may save bank charges, but there will be heightened security costs.

You now have to pay more to secure the premises, especially at the end of a day when more cash is around. How is the money to be transported? There are also many big opportunity costs. Sophisticated machinery that has been designed to process electronic payment, installed at great expense over the years, will now lay idle. The funds spent could have been diverted into areas of revenue generation.

Apart from the inconvenience and safety issue, who walks with dollars to buy gas nowadays anyway? Will persons now make special pit stops at banks to get cash? It is important that we hear what the views of the Central Bank and the Payments System Council are in relation to this move. Will there be systemic repercussions? For some years now, the Council has been actively involved in promoting the use of e-payments to chart the way forward for e-payments in Trinidad and Tobago.

The Financial Intelligence Unit and the Trinidad and Tobago Police Service also have a clear stake in this matter.

Electronic transactions are easier to track and a move toward full-scale electronic payment would make each member of the association fully accountable, minimizing risks associated with cash transactions. Further, given the significant spread of gas stations, electronic transactions in this sector would be ideal.

So what then for the gas station owners? The Association should explore other options.

If the grouse is the inflexibility of current arrangements due to subsidy measures, then the State must come to the table in relation to this.

That said, the State has already made strides in the gradual removal of the fuel subsidy at a pace which gives the economy enough time to adjust and cushions the impact on consumers. The latest move by the Association seems to wilfully ignore this.

Down the road, the deeper issue is our over reliance on cars.

Instead of making advances to more sustainable modes of transport, on Friday we are poised to make a big step backwards