Lower Interchange Rates and Processing Changes Can Make Buying Gas
Easier for Consumers and Benefit Gas Stations
SAN FRANCISCO--(BUSINESS WIRE)--June 26, 2008--Visa Inc. (NYSE:V)
today announced that 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. Visa's new processing
approach for fuel transactions will enable 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 also will reduce interchange rates for fuel transactions,
which can lower costs for oil companies and service stations and can
be passed onto 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. And by lowering our rates, we hope to see oil companies
pass these savings along to their stations and ultimately to
consumers, said Bill Sheedy, global head of corporate strategy and
business development for Visa Inc. 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 percent 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(1). In this extraordinary environment, Visa's combination of
fuel-payment changes can provide consumers with increased purchasing
power at the pump and offer fuel merchants opportunities to improve
their business operations.
Visa is restructuring consumer interchange for transactions at
automated fuel dispensers and service stations in the United States,
effectively lowering interchange rates. Interchange for Visa consumer
debit cards (Visa Check Card and Visa prepaid) will be capped at $0.95
per transaction. This change will become 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. This adjustment will take effect system-wide for all
fuel transactions in October 2008. In the meantime, Visa is willing to
work with fuel merchants and their acquirers individually to process
credit transactions at these lower rates, ahead of October.
Even though Visa's interchange rates on fuel transactions are
already among the lowest in our system, the run-up in fuel prices to
today's unprecedented levels requires an exceptional response, said
Sheedy.
As an example, under the new rates, if a motorist uses a Visa
Signature credit card to fill a 15-gallon tank at $4 a gallon - or $60
total - the acquiring institution generally would pay $0.94 in
interchange fees, a savings of 14 percent over current rates. Using a
debit card, that same transaction could be cleared within hours,
quickly 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, these interchange adjustments have an even
greater impact. For a $120 consumer transaction, the level of
interchange for the same Visa Signature transaction would be $1.63,
for a 43 percent savings. With the cap on Visa Check Card interchange,
an acquirer would see a reduction of 59 percent on fuel transactions.
People are frustrated enough with the price of gas today; they
shouldn't be frustrated with the payment process as well, said
Sheedy. We took an entirely new approach to processing fuel payments,
and created a solution that removes many of the major barriers that
consumers and station owners face today at the pump.
This fall, Visa will implement 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. This
can significantly reduce the hold times that financial institutions
place on cardholders' accounts. Gas stations will send a final
transaction amount within hours - if not minutes - of a cardholder's
purchase. Current fuel-payment processing can take up to two days or
more.
Real-Time Clearing also provides merchants and acquirers with more
control over their acceptance processes, allowing them to make better
authorization decisions. This can help drive increased sales for
stations because it reduces the number of consumers that encounter a
shut-off before their tanks are full. Consumers benefit by being able
to pump more gas in a single transaction before hitting authorization
limits. Real-Time Clearing can also qualify a station's transactions
for better interchange rates at higher ticket amounts, which can lower
station owners' costs.
Until the new processing changes are implemented in Visa's October
systems upgrade, Visa is allowing consumer fuel transactions up to
$125 to qualify for its best-available interchange rates. This interim
step is effective July 18, 2008 and will remain in place through
October 2009. Once gas stations and their financial institutions
migrate to Real-Time Clearing, consumer fuel transactions up to $500
can qualify for Visa's best available interchange rates.
About Visa
Visa operates the world's largest retail electronic payments
network providing processing services and payment product platforms.
This includes consumer credit, debit, prepaid and commercial payments,
which are offered under the Visa, Visa Electron, Interlink and PLUS
brands. Visa enjoys unsurpassed acceptance around the world and
Visa/PLUS is one of the world's largest global ATM networks, offering
cash access in local currency in more than 170 countries. For more
information, visit www.corporate.visa.com.
(1) U.S. Energy Information Administration (www.eia.doe.gov)
CONTACT: Visa Inc.
Ted Carr, +1-415-932-2370
tcarr@visa.com
SOURCE: Visa Inc.