Visa Inc. said it is implementing processing and rate changes that will result in benefits for American consumers and fuel merchants frustrated by rising prices at the pump.
The company said its new processing method for fuel transactions will allow consumers to buy gas more easily and allow motorists and station owners to better avoid the risks and inconveniences associated with pump limits and holds on funds.
Visa is also reducing interchange rates for fuel transactions, which can lower costs for oil companies and service stations and pass savings to consumers at the pump.
"While Visa cannot lower the price of crude oil, there are things we can do to help make the process of buying gas easier for our cardholders,” said Bill Sheedy, Visa’s global head of corporate strategy and business development. “And by lowering our rates, we hope to see oil companies pass these savings along to their stations and ultimately to consumers. As oil prices rapidly rise to unprecedented levels, we are accelerating our ongoing efforts to address the issues in the fuel segment."
The new programs come amid a nearly 100% jump in the price of crude oil in the past year, which has driven gas prices in the U.S. from an average of $2.98 a gallon in June 2007 to $4.07 in June 2008.
Visa is restructuring consumer interchange for transactions at automated fuel dispensers and service stations in the U.S., effectively lowering interchange rates. Interchange for Visa consumer debit cards (Visa Check Card and Visa prepaid) will be capped at $0.95 per transaction.
The change becomes effective July 18, 2008. Visa credit interchange applied to fuel transactions has been restructured into a single, lower rate across all consumer credit card transactions, and adjustment that will take effect system-wide for all fuel transactions in October 2008.
In the immediate term, Visa said it’s willing to work with fuel merchants and their acquirers individually to process credit transactions at these lower rates, ahead of October.
Under the new rates, for instance, if a motorist uses a Visa Signature credit card to fill a 15-gallon tank at $4 a gallon ($60 total), the acquiring institution generally would pay $0.94 in interchange fees, a savings of 14% over the current rates. Using a debit card, that same transaction clears within hours, removing the $60 hold that is often placed on a consumer’s funds for one or two days in the current system.
For higher transaction amounts, the interchange adjustments have a greater impact, the company said.
This fall, Visa is implementing Real-Time Clearing, which represents a fundamental change and significant improvement in how fuel transactions are processed. With Real-Time Clearing, transactions will be processed immediately instead of at the end of the day, which could reduce hold times that financial institutions place on cardholders’ accounts.
Gas stations will send a final transaction amount within hours or minutes of a cardholder’s purchase. Current fuel-payment processing can take up to two days or more.
For more information about Visa and fuel transactions, visit http://corporate.visa.com/md/dl/documents/downloads/VisaGasFacts.pdf