Visa has announced plans to cut the fees charged to petrol stations in the US, amid growing unrest at the effect that high interchange charges are having on merchant profits.
Announcing the move, Visa corporate PR came over all philanthropic, issuing a gushing press release bearing the headline:
'Visa to help ease the pain 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.
The not-so-hidden subtext: Big oil is screwing us all, but Visa feels your pain..
The new programme follows a nearly 100 percent jump in the price of crude oil in the past year, which has driven gas prices in the US from an average of $2.98 a gallon in June 2007 to $4.07 in June 2008.
As the price of oil has soared, so too has Visa's take on the interchange. With a fixed rate of about two per cent per transaction, and gas topping $4 per gallon, Visa's slice has edged up towards ten cents per gallon, severely eroding the retailer margin
on the sale.
As a result, some stations have stopped taking cards at the pump, offering incentives for cash-only transactions and issuing their own-branded loyalty cards. Others have sought out alternative payment options. Florida-based National Payment Card claims to
have signed up 300 gas stations to a new service which essentially uses the consumer's driving license as a debit card. The magnetic strip on the back can be linked to a bank account, and a pin is required every time the license is used to buy gas. NPC charges
a fixed fee of 17 cents per transaction.
With the US House of Representatives currently scrutinising interchange, Visa's commitment to cut back on the rake-off has little to do with consumer compassion and everything to do with corporate self-interest - no matter how well-crafted the PR.