The advocacy group Consumers Union has praised Visa Inc.'s plan to reduce authorization hold times for gas purchases.
The San Francisco payment company said last week that it is planning to change its processing systems to enable faster settlement, reducing the amount of time gas stations impose authorization holds on consumers' accounts. These holds, which usually exceed the amount purchased, can remain on customer's account for several days.
Consumers Union said Friday that the holds can be a burden on consumers.
"It's unfair for gas stations to impose a hold on their customers' own money for amounts that exceed how much they've spent," Michelle Jun, a staff attorney in the group's San Francisco office, said in a press release. "Visa deserves credit for taking this step."
She also called on MasterCard Inc. to follow suit.
MasterCard said it is always looking for ways to improve its network, but it did not say whether it would change its hold policies.
Visa also is cutting its fees for gas purchases.
On July 18 it will cap interchange for fuel transactions made on consumer debit cards at 95 cents. In October, it will put into effect a "systemwide" restructuring making the interchange for all consumer credit card gas purchases "a single, lower rate" of 1.15% plus 25 cents a transaction.
In the meantime, Visa said, it is "willing to work with fuel merchants and their acquirers individually to process credit transactions at these lower rates."
Visa last updated its interchange rate schedule in April.
As of April, the interchange on Visa debit transactions at automatic fuel dispensers and service stations was 0.7% of the transaction plus 17 cents. For credit transactions, the interchange ranged from 1.43% plus 10 cents to 2.10% plus 10 cents, depending on the type of card.
MasterCard capped its interchange fees on gas purchases of $50 or more, in April of last year,
Visa and MasterCard said they hopes the changes will prompt oil companies to pass the savings on to retailers and consumers.
Senate Majority Whip Dick Durbin, D-Ill., praised Visa's interchange plan last week — and used it as an opportunity to stump for legislation he has sponsored that would regulate the fees.
Visa's announcement is "an acknowledgment that high interchange fees are hurting merchants and consumers," he said in a press release. "Congress needs to pass meaningful and comprehensive reform of interchange fees."
