April 5, 2008, will bring more than showers and flowers to petroleum retailers, as Visa U.S.A. institutes significant changes. The card Association intends to implement new terms for all card transactions at automated fuel dispensers (AFDs).
The changes will include higher chargeback protection limits and a fee on merchants who are unable to support partial authorization for AFD transactions. Transaction limits will rise from $50 to $75, which will necessitate partial authorization for some customers' transactions.
Certain merchants do not have the technical capability to comply with the change. Visa will motivate them by charging 1 cent per transaction to those who do not upgrade equipment in accordance with the new limits. The charge is called a partial authorization nonparticipation fee (PANPF).
Having the partial authorization in place is intended to increase the number of successfully completed transactions, especially for Visa prepaid and check cards. In April 2010, Visa plans to eliminate the PANPF fee, at which time partial authorization capabilities will be mandatory for merchants to qualify for the Custom Payment Service/AFD interchange rate.
Once the changes are in place, everything will work much the same as today, as long as customers have at least $75 available in their accounts for the pre-authorization hold. If customers do not have $75 available, merchants who have PANPF capability will get an authorization message, allowing for a lower dispensing limit.
Visa strongly encourages merchants, processors and vendors to begin determining now how best to prepare for the new requirements. Even merchants who have few AFD transactions and opt to pay the fee will no longer have that choice by 2010.
Merchant level salespeople can help their customers weather the coming storm by urging them to upgrade their equipment soon.
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