NEW YORK: Visa Inc and Mastercard Inc are planning a raft of changes to rules for petrol stations to allow larger transactions after a surge in fuel prices across the United States made it hard for some drivers to fill up using credit cards.
Many petrol stations have a US$125 (RM526) limit for Visa transactions at the pump because larger transactions trigger higher fees for certain cards, as well as additional liability in the event of fraud.
In recent months, that’s forced some customers – those who drive large sport utility vehicles or SUVs in states with high fuel prices, for example – to pay using two transactions to top off their tanks.
Starting next month, the San Francisco-based company will quadruple the maximum transaction amount that carries better interchange rates for purchases made with small-business and commercial cards, according to a document seen by Bloomberg.
Visa will also raise the fraud-liability threshold to US$175 (RM737), according to a person familiar with the matter. Taken together, the moves should mean gas stations can raise limits and fewer consumers will face pump shutoffs.
“In response to increased fuel prices, Visa is making an adjustment,” according to the document.
“This change will ensure the best-available interchange rates are received for larger fuel transactions, which should lead to fewer pumps shutting off while cardholders are refuelling.”
A spokesman for Visa confirmed the authenticity of the document.
Rival Mastercard will increase the amounts it pre-authorises at petrol stations to US$175 (RM737) from US$125 (RM526) for consumer cards and to US$500 (RM2,105) from US$350 (RM1,474) for commercial cards.
“In light of current fuel prices and in an effort to support fuel merchants, Mastercard is planning to increase pre-authorisation levels,” the Purchase, New York-based company said.
“This will be complemented by additional fraud-monitoring efforts to support fuel merchants during this time.”
Gas prices have soared in recent months, with the national average for a gallon of regular unleaded fuel reaching US$4.21 (RM18) this week, according to the American Automobile Association.
That’s up from US$3.61 (RM15) a month ago and just US$2.88 (RM12) a year ago. The move is just one of many that Visa and Mastercard are making in the coming weeks.
Mastercard, for instance, will lower the fees it charges for any transaction under US$5 (RM21) by about 300 basis points, according to separate people with knowledge of the matter. The firm is also planning to lower the rates it charges hotels, rental-car companies, daycare facilities and casual-dining restaurants.
The company’s so-called digital-enablement fee, which it charges on all online transactions, will increase to 0.2% of a purchase price from 0.1%, and Mastercard will charge a minimum of two cents (8.4 sen) per transaction.
That means that, for a US$50 (RM211) online purchase, the fee will triple from half a cent to two cents (8.4 sen).
The fee will also be capped at 20 cents (84 sen), meaning that for larger online purchases – those over US$1,000 (RM4,210) –Mastercard will be cutting the amount a merchant pays.
As part of that move, Mastercard is bundling more of its services into the digital-enablement fee, such as charges for mitigating fraud, preventing identity theft or verifying addresses.
“Our focus remains ensuring the safety and security of payments while balancing the interests of all parties,” Mastercard said in a statement.
“Electronic payments have proven even more valuable since the start of the pandemic.
“And that’s why we’re seeing merchants encouraging their customers to use electronic forms of payment due to the significant value that they receive in return.”
The company is also planning to increase the rates it charges so-called Merit I merchants, which covers most e-commerce spending.
Merit III retailers – those involved in most in-store spending – along with convenience stores and supermarkets will also see increases in swipe fees starting this month.
Smaller Retailers Visa, for its part, announced earlier this month it will cut the fees it charges those businesses with less than US$250,000 (RM1.05mil) in Visa consumer credit-card volume by 10%.
The change would apply to the vast majority of US businesses, the network said.
At the same time, though, the firm is also planning to increase the fees it charges for most online spending.
The network first planned to introduce the change as part of an update it made to its rate tables in 2020.
At the time, the Visa described the changes as the biggest in a decade. The new charges were delayed due to the pandemic.
Visa said the increase can be avoided if retailers adopt some of its technologies designed to improve the security of a transaction.
