Visa Gets a Boost for Prepaid Partial Authorization from Shell

Nearly 4,000 gasoline stations branded by Shell Oil Co. have so far adopted a technical change from Visa USA that allows merchants to cut off delivery of a product on a prepaid card transaction as soon as the funds in the account are exhausted. Shell plans to roll out the enhancement to more of its 13,700 U.S. stations over the course of the next year, the gasoline marketer says, and Visa is in talks with other, unnamed merchants, including quick-serve restaurants, about adopting it, says Carrie Vriheas, vice president for prepaid products at Visa. The new enhancement, called Visa partial authorization, lets gasoline stations dispense product at the pump on prepaid cards in cases where the funds held in cardholder accounts fall short of the standard authorization threshold, which is generally $50, Vriheas says. With partial authorization, a code change at the pump's terminal shuts the pump off when the funds are exhausted, unless the customer stops pumping first. The change requires no transaction-field changes and has no effect on the transaction's interchange rate, Vriheas says. Shell Oil is the latest merchant to adopt partial authorization, and its deployment is the largest so far. A Visa spokesperson says the other merchants, whom she declines to name, include gasoline marketers. Vriheas says the service, which Visa released in 2005 in an effort to address the problem of so-called split-tender transactions, came about as a result of the bank card network's efforts to improve customer service in prepaid transactions. “Our strategy is to create prepaid products, but also to create a suite of point-of-sale enhancements to make sure consumers as well as merchants have a good experience,” she says. Other services Visa has introduced for its prepaid products include a balance-inquiry enhancement, auto-substantiation of tax eligibility for payments on prepaid health-care cards, and, most recently, the ReadyLink network, which allows cardholders to reload value on their cards with cash at merchant locations. Other networks have introduced similar services. MasterCard Worldwide, for example, offers its own partial authorization service and has a reload network as well as an auto-substantiation product for its prepaid cards. Vriheas says Visa has released partial authorization only for prepaid cards for the time being, though she says its use with “lower-end” debit card balances “might make sense” at some point in the future. Shell Oil Products U.S., a subsidiary of Shell Oil, operates some 6,000 stations in the West. Another 7,700 Shell-branded stations in the East and South are operated by Motiva Enterprises LLC, a company in which Shell Oil holds a 50% stake. Since most of these stations are owned by independent businesses, Shell says it is difficult to predict when each remaining station will adopt partial authorization, but the oil company expects the stations will implement it over the coming year as they install upgraded point-of-sale systems.