Credit-Card Companies to Change Rules for Gas Stations to Address Pump Limits
NEW YORK — Visa Inc. and Mastercard Inc. are making changes that should benefit gas station operators and drivers who are paying significantly higher prices at the pump. Starting this month, consumers should face fewer difficulties paying for high-priced fill-ups that may surpass limits set by the credit card operators.
Purchases made using Visa cards are limited to $125 at many gas stations due to the higher credit card fees triggered by larger transactions, according to a Bloomberg report. Added liability in the event of fraud is also a factor. As a result, some drivers who fill up vehicles with large gas tanks in states with the highest fuel prices have had to make two transactions at a time.
As of this month, Visa will quadruple the maximum transaction amount associated with better interchange rates for purchases made with small business and commercial cards. it will also raise the fraud-liability threshold to $175, resulting in fewer transaction limits and fewer shutoffs at the pump.
"In response to increased fuel prices, Visa is making an adjustment," Visa stated in a document obtained by the news outlet. "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 refueling."
Meanwhile, Mastercard is increasing its allowable preauthorization amounts at gas stations from $125 to $175 for consumer cards and from $350 to $500 for commercial cards.
"In light of current fuel prices and in an effort to support fuel merchants, Mastercard is planning to increase pre-authorization levels," the company stated. "This will be complemented by additional fraud-monitoring efforts to support fuel merchants during this time."
These changes come as drivers across the United States continue to feel pain at the pump due to Russia's invasion of Ukraine sending prices up throughout the world. While high global crude oil prices offset a decline in demand over recent weeks, keeping consumer prices steady, U.S. drivers may see some relief in the wake of President Joe Biden's tapping of the Strategic Petroleum Reserve.
Even as Visa and MasterCard makes these changes to smooth out the payment process at the pump, the companies face criticism from retailers and various trade groups for their plans to increase swipe fees after a two-year, COVID-19 pandemic-related pause. Most of a $1.2 billion in fee increases will come from higher interchange fees, which are paid by merchants to the card-issuing banks when shoppers use credit cards, as Convenience Store News reported.
The Retail Industry Leaders Association, whose members include more than 200 retailers, product manufacturers and service suppliers, issued a statement condemning the planned increase in swipe fees, while the Merchants Payments Coalition (MPC) has requested that the U.S. House Committee on Financial Services examine the fees.
"It's just especially troubling given the level of inflation right now," Stephanie Martz, general counsel of the National Retail Federation and an MPC executive committee member, told 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."