I don’t remember any of this (punishing). Branded credit cards were indeed used to instill loyalty, and they were treated exactly like credit cards (because they WERE credit cards issued by some random bank, just with a picture of the gasoline brand on it). When credit cards have surcharges (over cash), these branded credit cards also have them. Very few people use cash to buy gasoline nowadays, it’s a hassle to have to walk inside (sometimes twice if you need to get your change).
Today, branded gasoline company credit cards give discounts to customers using them, and bigger discounts to customers that are frequent users of them.