HOUSTON - A new Citgo proprietary rewards card, being launched in conjunction with Citi, "ups the ante" in the payment market for retailers, Citgo said in an e-mailed message to marketers.

The company calls the new card "one of the most robust rewards offerings in the industry" and is launching the card because of changes in the credit card marketplace. "In today??s technology-infused marketing environment, consumers expect rewards and incentives for their patronage. It??s time to step up our offering in order to retain our competitive edge," the company told retailers.

Citgo lost its co-branded MasterCard in February when Citi pulled the plug on it. Banks have shut down or cut back on rewards offers through several refiners and chain marketers because they regard the programs as unprofitable for the amount that they must spend marketing them.

Many oil cards are now regarded as "toxic," according to a credit card executive with one major oil company. Banks make their money on credit card finance charges, late fees and interchange rates but those revenue streams have dwindled over the past two years as a result of regulatory reform and more cautious purchasing behavior, he said. ConocoPhillips, Marathon and Sunoco have also seen their co-branded rewards cards yanked.

Citgo??s current proprietary card, the Citgo Plus Card, represents only 3% of transactions at retail sites but the company believes that the penetration rate will significantly increase for retailers if they promote the proprietary card program. Citgo will not accept any new applications for the Plus Card but consumers will be able to continue using it. If they want the new rewards card, they will have to apply for it separately. If they approved, their Plus account will be closed.

According to Citgo, proprietary card users have proven to have "extremely desirable purchasing behavior characteristics" ?" they are more loyal, make approximately 50% more transactions per month than bank card users, and spend an average of 30% more per fuel card purchase. Some 95% of them make their purchases at one or two sites and 75% shop at just one location.

"Outside of price and supply issues, credit card fees are one of the most significant concerns for marketers and retailers," Citgo noted in its message to marketers. "The predominance of bank cards today as the most preferred method of payment for consumers translates to processing fees that significantly eat into margins. In contrast, the proprietary card program carries no fees to the marketer and retailer, a distinct advantage."

Citgo has embarked on a multi-platform communications effort for the card. It has sent marketers downloadable sales kits, a video of marketing sales manager Alan Flagg announcing the launch, and mouse pads and FAQ sheets. Citgo also wants cashiers, dealers and station operators to use "suggestive selling" to push the new offering and is giving them 1-800 phone application cards to hand to customers interesting in obtaining the new card.

There will be a three-wave media campaign from September through December 31 to launch the new card, along with public relations efforts and some advertising in select markets. Marketers may tap into the advertising materials and customize them for their own media buys. The Citgo Rewards Card message will also be "a significant part" of the 2013 POP and advertising campaign, the company said.

?" Carole Donoghue