Red house icon, symbols of public utilities are in cells of window. Dollars and coins above. Payment of housing and public utility services and family budget

Utility Rates For Credit Card Transactions

Every month, millions of customers pay their utility bills online as a convenience. Many of those people have also set up automatic payments so that they don’t forget and wake up one morning only to find out the water’s been shut off and there’s no way to take a shower. Setting up automatic payments is often marketed heavily to consumers for that very reason — as a convenience for their sake.

Most of these consumers are using major credit cards in order to pay their bills. The problem is that every single time a person charges any product or service to a credit card, the entity they are buying from pays a portion of their profits in credit card processing fees. These fees are often called interchange fees. If you’re running transactions on behalf of millions of customers every month, then it’s likely there’s an opportunity awaiting you to save some money on those transactions.

Companies that provide the following utility services could potentially qualify for interchange rates include:

  • Home Heating Oil Delivery Companies
  • Sanitation services
  • Water services
  • Electrical services
  • Natural gas services
  • Wastewater treatment services


Unfortunately, telecommunication services and cable services are not eligible for MCC 4900 because they are already covered in other merchant category codes.

Why should you accept credit card payments?

In March 2020, one of the biggest digital revolutions began. Globally there was a major increase in how many consumers were making digital payments using debit and credit cards. With more of life moving online, more people started to discover the multitude of options available to them to make quick, easy payments with their preferred method of payment safely and securely. Rather than pay in person or go to the post office to mail a check, some people began paying with an app! It’s very likely that your consumers who switched over to automatic payments from in-person payments or writing checks are very likely never going to go back to those old methods. Digital payments are here to stay, so Interchange Pros helps you to reduce your costs in spite of the increase in debit and credit payments.

Background on the Utility Rate Program

Visa launched the program in April 2005 and MasterCard launched theirs in October 2006 with a focus specifically on the recurring payments market and those who take payments for utility bills. Instead of paying normal interchange rate fees, which could be around 2.80% plus $.10 per transaction depending on consumer credit card transactions, utility companies would only pay a $.75 rate for consumer debit and credit card transactions that meet the requirements. This is a boon to utility merchants who want to save on their transactions every month.

Preventing Service Interruptions and Fortifying Security

Have you ever been frustrated when trying to make a payment on a website? Or do you have customers who have complained about your payment system? Utility companies must be proactive to prevent poor customer service experiences as well as cyber-attacks. Improving your system could help you save costs and increase security.

What are MCCs?

Merchant category codes (MCCs) identify the kind of business that a merchant is engaged in and they are broken down into General Merchant Category Codes and Travel and Entertainment Merchant Category Codes. Utility companies would be under the General Merchant Category Codes, which includes industries such as agriculture, transportation, retail and professional services. The MCCs are broken down into ten different types within MCCs 4800 to 4999.

Services such as telecommunication equipment and telecommunication services are already under other MCCs, specifically 4812 and 4814, respectively. MCC 4900 only covers utilities such as electric, heating oil, sanitary, water, and gas.

Are there any restrictions?

Yes. Visa and MasterCard have restrictions and rules regarding who is eligible. 

Qualifying For Visa

In order to qualify for lower rates with Visa, you must accept all Visa debit and credit cards and register with the Visa Utility Program. 

When processing recurring payments, the recurring payments indicator must be included in the authorization and the clearing record for each of those recurring transactions. All transactions must also include the bill payment indicator, and you must submit the Merchant Verification Value (MVV) with those transactions.

However, you will not qualify if you charge cardholders any fees for processing Visa transactions. If you use any third-party services that charge a credit card processing fee or provide a discount to cardholders with a specific card, you may not be eligible for the reduced processing fees for utility companies. 

Qualifying For MasterCard

You may notice that the requirements for Visa and MasterCard are similar in many ways. MasterCard requires utility merchants to accept MasterCard debit and credit cards as a form of payment for the services that the merchant provides. Additionally, the utility merchant must register with the MasterCard Program, which is how they will get a program registration identifier code (UXX). This code must be submitted with all of the transactions submitted.

Just like with Visa, MasterCard requires that the utility merchant does not require the cardholder to pay any fees for processing MasterCard transactions, nor can a third-party bill service provider charge any such fees to cardholders for processing.

Why Interchange Pros

You are always thinking about ways to improve the customer experience and providing your customers the most options to make their payments quickly and safely with their preferred method of payment. 

Interchange Pros is always thinking about its impact on businesses and government agencies, their consumers, and your employees. We connect with you so that we understand your cost-reduction goals and maximize your savings. 

Setting up a new system is easy and will not interrupt service to your existing customers. In fact, we provide a service so you can seamlessly transition and continue to provide excellent customer service to the consumers in your service area. So call Interchange Pros today to speak with us about your needs and goals so we can get started on finding the right solutions for you.

Back To Blog