ALEXANDRIA, Va.—Facing pressure from fuel retailers, the global credit card networks increased their pump pre-authorization limits, as gasoline and diesel prices reach historically high levels. Visa, Mastercard and Discover have all raised their limits to $175. However, this change may not take effect automatically. Retailers may still experience shutoffs and need to contact their processors to authorize the increase to $175.
Prior to the new threshold, Visa and Mastercard’s pre-authorization limits were $125, and Discover’s was $100. American Express does not have limits.
Given record-high prices at the pump, an increasing number of customers’ fueling transactions have been shut off, and they have had to start a second transaction to complete the fill up. This is not only frustrating and inconvenient for customers, it also means retailers pay more in credit card swipe fees.
As fuel prices rise, margins compress, and the fees merchants pay when a customer uses a credit card for the purchase multiply. This is because credit card swipe fees are a percentage of the total cost of the transaction. From 2020 to 2021, swipe fees paid by the industry increased almost 26% to $13.5 billion, up from $10.7 billion, according to NACS State of the Industry data. Swipe fees paid by the industry today are expected to be much higher with the average price of fuel around $5 a gallon.
Last month, NACS testified before the Senate Judiciary Committee at a hearing looking at the excessive swipe fees charged by Visa and Mastercard. NACS argued that these fees multiply with every cent of inflation, and that they continue to rise year over year given how they are centrally set by the card brands and insulated from market forces driving them down. The solution is real competition in the credit card market instead of two dominant, monopolistic players.
“We need to deal with the competition problem in credit cards to have a fair deal for merchants and consumers, and frankly for the U.S. economy,” stated NACS General Counsel Doug Kantor. “When we have competition, prices are lower, we have more innovation, and people have more money in their pockets. They can spend more, and that consumer spending helps drive the economy.”
NACS is asking convenience and fuel retailers and suppliers to contact your member of Congress and ask them to stop Visa and Mastercard’s price-fixing and bring competition to payment cards.