Tuesday, March 17, 1998

AutoGas develops prepaid gas card

By SCOTT SCHOLTEN / Abilene Reporter-News

First it was prepaid phone cards.

Now, if Abilene-based AutoGas Systems Inc. has its way, millions of Americans will be filling their tanks using prepaid gasoline cards.

AutoGas has been developing the prepaid gas card system over the last two years.

If it succeeds, the company may be well on its way to making another mark on the gas station and convenience store industry.

AutoGas made its name in 1981 developing the system that many credit card and debit card holders use to buy gas at the pump.

AutoGas President Randy Nicholson said he is optimistic the prepaid cards will succeed.

Nicholson said 70 percent to 80 percent of gas purchases are made with cash. One-third of Americans do not have a credit/debit card-capable financial service, which is today's only method of paying for gas and go -- other than outright theft.

AutoGas is beginning market tests on its prepaid gas card to judge customer and vendor opinions of the system before full implementation. Two vendors will try it out (which chains are still undetermined) and an unknown number of card-carriers.

The cards will be sold in $25 and $50 denominations.

If reaction is positive, the system's full implementation will happen sometime between April and June, Nicholson said.

Nicholson said market research shows the public accepts the concept's possible advantages.

Gas vendors will need to offer incentives such as discounted fuel if people are to buy the cards, Nicholson said.

An advantage for customers, Nicholson said, is that they will be able to use the cards for budgeting purposes by making the week's or month's gas outlay at once.

The trendiness of such a monetary instrument figures into the marketing equation, too, Nicholson said. Teens can be seen about town carrying pagers and cell phones. AutoGas hopes the cards are seen in that same vein.

Nicholson said mothers who don't want to leave children unattended while paying for gas should find additional convenience.

For vendors, cash-handling overheads may be reduced, he said.

Cash register lines should shrink from reduced in-store traffic also. On that point, Nicholson said the company will have to convince convenience stores that shorter lines will boost non-gas sales due to shorter waits.

AutoGas also provides some bookkeeping services through the system, which should be an additional draw for vendors, Nicholson said.

AutoGas teamed up with ValueLink, a unit of First Data Corporation, to deliver the service.

Deborah Grant, general manager of ValueLink, said transactions with stored value (prepaid) cards are increasingly accepted by retailers nationwide. AutoGas System's new program is one more example of that.

AutoGas may have to pull off quite a marketing trick, though.

Speaking as a consumer, "I can't visualize why I'd want one," said Joe Davis, head of Skinny's Convenience Stores. Davis said the advantages of a prepaid gas card over a credit or debit card are not yet clear to him.

However, Davis said, buying gas with the present pay-at-the-pump system "has been a very, very consumer-friendly procedure."