Visa, Mastercard to Update Pump Limit Rules

In addition, the credit card companies are planning a slew of fee changes for merchants.

April 04, 2022

Gas Station Forecourt

ALEXANDRIA, Va.—Visa and Mastercard are planning to update rules regarding pump limits, as high gasoline prices are making it difficult for some drivers to fill up in one transaction, reports Bloomberg.

Beginning in next month, Visa will quadruple the maximum transaction amount that carries better interchange rates for purchases made with small-business and commercial cards, and it will raise the fraud-liability threshold to $175.

Mastercard now will preauthorize transactions to $175 for consumer cards and $500 for commercial cards.

The two credit card companies are implementing other fee changes that will take place in the coming weeks.

The company’s 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 per transaction. That means that, for a $50 online purchase, the fee will triple from half a cent to two cents. The fee will also be capped at 20 cents for online purchases over $1,000.

Mastercard also told Bloomberg that it will lower the fees it charges for any transaction under $5 by about 300 basis points. The company says it plans to lower the rates it charges hotels, rental-car companies, daycare facilities and casual dining restaurants.

Bloomberg reports that Mastercard is bundling more of its services into the digital-enablement fee, such as charges for mitigating fraud, preventing identity theft or verifying addresses. These types of practices have been criticized by retailers in the past as questionably legal tying arrangements.

Merit III retailers, which include convenience stores and supermarkets, will experience swipe fee increases starting this month.

Convenience retailers, gas stations, grocery stores and restaurants will be left out of Visa’s planned 10% reduction in swipe fees for retailers with $250,000 or less in Visa consumer credit volumes.

Visa is increasing online spending fees and will be the biggest changes in a decade, but the new charges were delayed due to the pandemic.

In a statement to Bloomberg, Visa said the increase can be avoided if retailers adopt some of its technologies designed to improve the security of a transaction.

“Any rate increases are largely avoidable and apply to transactions that are sent to Visa with insufficient data, are coded incorrectly, carry increased risk or are processed without using” the firm’s chip card technology, Visa said in the emailed statement.

Last week, the Merchants Payments Coalition (MPC) sent a letter to the House Financial Services Committee, asking the committee to go beyond examining overdraft fees and add swipe fees to their examination of bank fees.

“It’s just especially troubling given the level of inflation right now,” Stephanie Martz, general counsel of the National Retail Federation and an executive committee member for the Merchant Payments Coalition, said in an interview with Bloomberg. “We’re clawing our way to hang onto our slim margins as is. Given that these fees sometimes exceed what our margins are, we have to pass some of those rate raises onto consumers.”

The MPC represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants. NACS is a founding member of the MPC.

In the U.S., credit card swipe fees remain one of the highest operating costs for convenience store retailers after labor, according to NACS State of the Industry data. The increase in consumer prices amounts to more than $700 a year for the average American family. Consumer preferences for more touch-free transactions and the coin circulation challenge in summer 2020 led to record debit and credit card usage at convenience stores. In 2020, 74.6% of all transactions were paid by plastic, and overall card fees paid by the convenience store industry were $10.7 billion, NACS SOI data indicate.

Join NACS for the State of the Industry Summit next week, April 12-14, at the Hyatt Regency O’Hare, Chicago. On Wednesday morning, Charlie McIlvaine, chairman and CEO of Coen Markets, will dissect 2021 operational and financial data and share his perspectives on how convenience retailers can foster long-term growth and operational efficiencies within their own companies. Later, John Benson, director, AlixPartners, will share essential insights that can help retailers understand where to focus investment, resources and energy in 2022 and beyond. Register for the SOI Summit today.