A MyGallons Rival Emerges to Let Users Lock in Gas Prices

While MyGallons LLC struggles with issues surrounding the launch last week of its prepaid card that lets consumers hedge the price of gas (Digital Transactions News, July 7), another startup is emerging with a similar business model. Boynton Beach, Fla.-based GasBankUSA LLC plans to start issuing debit cards later this year that consumers can use to prepay for gasoline at a current price. Though the program is not yet operational, GasBankUSA has a 3-month-old Web site and associated newsletter to keep interested consumers and companies informed. Jonathan Paul, chief financial officer for Boca Networks.com LLC, the parent company of Gas Bank USA, says the newsletter has attracted “thousands” of sign-ups so far. “We've go a pretty good base,” he says. Paul will not reveal projections for cardholders and transaction volume. “We have made projections, but it's premature to get into that now,” he says. One reason is that the company has not yet settled on an acceptance network that could give its card access to a majority of gas pumps in the U.S. Paul says the company is in talks with several, which he won't name. On its Web site, the company says its card “is accepted at most of the nation's gas stations, including all the major national chains.” GasBankUSA's plan is to outsource card issuance to the network provider, Paul says. “We don't feel it's necessary to reinvent the wheel,” he says. Unlike MyGallons, which is aimed only at consumers, GasBankUSA plans to market its program to both individual consumers and corporate fleets. It will charge an annual membership fee of $19.95 ($29.95 for fleets), with a load fee that Paul says hasn't been finally determined but will likely be 2%. Like MyGallons, the GasBankUSA card will allow cardholders to buy gasoline on a Web site, loading the credit into their cards for use later at the pump. GasBankUSA will use a variety of financial instruments to hedge gas prices, allowing cardholders to lock in the current price. The company will likely not allow credit cards to pay for loads, Paul says, adding it will likely accept checks or electronic checks through the automated clearing house network to avoid credit card discount fees. With card fees, “suddenly there's another 2% to 3% going out the door to a credit card processor,” Paul says. “We don't believe there's room for that.” The benchmark for gasoline pricing will be a national price published by the American Automobile Association, with adjustments for state and local gasoline taxes. Cardholders living in high-tax states like California will likely pay a surcharge, Paul says, while those in low-tax states like New Jersey will probably receive credit. Transactions “most likely” will be protected by a PIN, Paul says. While final arrangements with a network are not yet in place, Paul is confident negotiations will conclude in time to allow for a launch by year's end. He adds that he doesn't expect the arrangements to create the need for any additional cardholder fees. “At this time we don't see that,” he says. “But things could change.” Paul says he and others at Boca Networks, a Web-development and -hosting company with a head count of about 20, have been working on the concept for GasBankUSA for a little more than a year. Paul says they were not aware of MyGallons, whose offices are just 60 miles south in Miami, until last week, when MyGallons announced its commercial launch. “We've tried to do our homework so when we roll [GasBankUSA] out we won't encounter the problems MyGallons is having,” Paul says of his competitor. MyGallons, which launched its service June 30, advertised acceptance at what it claimed was more than 95% of gas stations in the U.S. It claimed to have access to these stations through Voyager Fleet Systems Inc., a fleet-fueling network owned by US Bancorp. But US Bancorp denied Voyager had any relationship with MyGallons. Steven Verona, founder and chief executive of the company, told Digital Transactions News its agreement was actually with Go Gas Universal, a Voyager reseller. In a statement released this week by MyGallons, Go Gas confirmed that agreement, but MyGallons is still without a network for card acceptance. Verona says he is talking to other networks and expects to announce an agreement soon.