Alert: Credit Card Pricing Updates

Is your company prepared for the credit card pricing updates coming in April 2020? It is not uncommon for the card brands to update their rates twice a year, once in April and once in October.  However, fuel marketers have been fortunate over the past decade, with pricing updates on payment acceptance being largely confined to “association expense” fees, such as NABU and FANF. This year, there are several changes to interchange costs which will affect our industry. Some changes will be nonissues for most marketers, such as a four-cent increase on international card verifications, and some will have a large impact on the bottom line, like the reclassification of commercial card interchange categories being replaced with a more expensive classification.

While any change to payment acceptance cost, no matter the amount, will have an impact on the bottom line, take comfort in knowing that some can be avoided through updated technology. Below are the pricing updates that will affect fuel marketers in Spring 2020 and some tips on how the industry can isolate itself from the most expensive changes.

Mastercard:

  • Mastercard has three updates to its Utility program for the Spring of 2020.  Utilities Credit, World, and Enhanced categories will Increase from a flat $.65 to a flat $.75. With this update, Mastercard is aligning all credit categories to match a flat $.75 across the board. This will not affect debit or corporate/purchasing cards. While this is an increase, it affects a small percentage of cards and with Mastercard being a flat rate program, it will still be the preferred card method.

Discover:

  • Discover will issue a Card Brand Assessment increase of 0.01%
  • Discover is also Introducing an Integrity fee this year of $.05. This is a new fee only assessed when data is not passed correctly. Fuel marketers can isolate themselves from this fee by passing the appropriate data to the card brands.

Visa:

  • Domestic Credit verification requests will increase from $.025 to $.035
  • Domestic Debit verification requests will increase $.025 to $.03
  • International Verifications will increase from $.03 to $.07.  Mostly a non-issue for the energy industry, however, there may be some border state marketers accepting Canadian cards, so we wanted to include it.
  • Purchasing/Corporate Fuel Level II will have an increase from 2.05% + $.10 to 2.20% and $.10 This is another increase that fuel marketers can isolate themselves from. Purchasing cards are considered level III cards, and only into this category if the correct data is not passed. So similar to the Discover Integrity fee, check with your processing partner to see if you can pass the appropriate data to avoid this increase and qualify for the reduced rates for purchasing cards.
  • Visa is eliminating the Business CNP categories.  The result of this change is that any marketers receiving Business CNP T categories previous to April 2020, will fall into more expensive programs. Visa is renaming the “CNP” programs to categories listed in “Business Product 1” and raising the rates. This will be by far the largest increase in the Spring 2020 updates. To avoid this fee, check with your processing company to make sure you are able to pass the correct data or you may want to shop around for updated payment technology.

As an example, for companies currently qualified correctly as fuel marketers, but not passing the correct data to the card brands, the interchange rate increase, going into effect for April 2020, is as follows:

  • Business Product 1 (old CNP) Spending Tier 1 = 2.65% + $0.10 (Now a .60% difference between sending qualified data and non-data)
  • Business Product 1 (old CNP) Spending Tier 2 = 2.80% + $0.10 (Now a.75% difference between qualified data and non-data)
  • Business Product 1 (old CNP) Spending Tier 3 = 2.85% + $0.10 (Now an .80% difference between qualified data and non-data)
  • Business Product 1 (old CNP) Spending Tier 4 = 2.95% + $0.10 (Now a .75% difference between qualified data and non-data)
  • Business Product 1 (old CNP) Spending Tier 5 = 3.00% + $0.10 (Now a .80% difference between qualified data and non-data)

While some pricing changes are unavoidable, the reclassification of commercial cards outlined above represents the most significant financial impact to fuel marketers. Level II qualified transactions are not subject to Visa’s reclassification of commercial. Fuel marketers can avoid the added interchange expense by passing the Level II data with these transactions. Reach out to your processing partner before these changes become effective and ask about passing the correct data. This will isolate you from the major April changes and keep you in good shape going into next season. To learn more about the changes affecting fuel marketers this month, visit: https://help.qualpay.com/help/fuel-marketers-interchange-update.Marci Gagnon

Marci Gagnon, vice president of strategic alliances for Qualpay, has been in the payments industry for over 15 years with a concentration on recurring billing and the energy space. Qualpay provides processing solutions to fuel delivery and service businesses with tools designed to provide real-time reconciliation and cost reduction. For additional information contact Marci Gagnon at marci@qualpay.com or visit https://www.qualpay.com/industry/utility-and-energy

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