Visa’s service-fee update for utilities: What changes and what doesn’t

Utilities are under pressure to expand digital payments choice without increasing customer friction, confusing disclosures, or absorbing card costs they may not be able to recover efficiently. This challenge is becoming more urgent, as customers expect seamless online and autopay experiences, while acceptance costs continue to vary by card type, channel, and payment size. 

That’s why Visa’s latest rules update matters. Effective October 18, 2025, utilities in MCC 4900 are included in Visa’s Service Fee Program, which expands flexibility for service-fee structures, including variable approaches and recurring payment scenarios. For billers, this is not just a rules update. It is a chance to reassess whether your current fee strategy still fits your payments mix, customer expectations, and cost-recovery goals. It also expanded its public rules after the October 2025 update, and industry analysts note that the program now includes utilities and offers more flexibility in how fees are applied and disclosed. 

• What changed with Visa’s utilities service-fee rules
• What it could mean for utilities, including autopay and digital channels 
• How to evaluate fee models without adding unnecessary customer friction 

A quick terminology note: Card network rules often use the word merchant as the umbrella term for any organization that accepts card payments, including utilities and other billers. In this blog, we use biller because it better reflects the real-world billing and payments experience utilities manage. 

Utilities often hear the terms convenience fee and service fee used as if they mean the same thing, but the distinction matters because the rules, eligible use cases, and customer disclosures can differ. In simple terms, a convenience fee is typically tied to an alternative payment channel, while a service fee is tied to a network-permitted program for eligible merchant categories such as utilities under MCC 4900. 

For billers, the practical difference is this: A convenience-fee model is often channel-based and simpler, while a service-fee model may offer more flexibility to align fees with payment size and recurring use cases. That flexibility can be valuable, but only if the final design matches network rules, disclosure requirements, and the customer experience you want to create. 

Visa has expanded its Service Fee Program to include utilities classified as MCC 4900. In practical terms, this gives eligible utilities more flexibility to use service-fee models that better reflect the cost of accepting card payments, especially when costs rise with bill size or when recurring card payments are part of the mix. Visa Core Rules. 

This matters because recurring and digital payment experiences are where utilities increasingly compete on ease and reliability. If a compliant service-fee model can extend into autopay and other card-payment scenarios, billers may have more room to align cost recovery with customer choice rather than relying on a one-size-fits-all approach. The opportunity is real, but so is the need for clear disclosure, thoughtful rollout, and careful testing before launch. 

Key points: 

• Who it applies to: Utilities classified as MCC 4900 under Visa.
• What it enables: More flexibility to use a service fee that can be variable (for example, tiered or percentage-based), where permitted.
• Where it shows up: Potentially both one-time payments and recurring/autopay card payments, with clear disclosure. 

• Better cost alignment
  Variable fee structures can more closely reflect the real cost of accepting larger or more complex card payments.
• Less pressure on one-size-fits-all fees
  Utilities may have more flexibility to move beyond a single flat amount that does not fit every bill size or payment scenario.
• More intentional autopay design
  Recurring card payments may be easier to evaluate within a broader cost-recovery strategy rather than an exception.
• Stronger customer transparency
  With the right disclosures and fee-free alternatives, utilities can better explain payment choice without creating unnecessary confusion.

In the 2025 ACI Speedpay Utility Trend Report, research reinforces why this flexibility matters now. Debit cards remain the most preferred payment method for utilities, accounting for more than a third of one-time payments, while credit card usage has declined significantly to just 16%. At the same time, digital channels continue to gain share, with nearly half of all utility payments now occurring through biller websites and mobile apps. These shifts highlight a clear trend: customers are gravitating toward lower-cost, account-linked, and digital-first payment experiences, making it increasingly important for utilities to align fee strategies with evolving payment behaviors rather than relying on legacy fee structures. 

• Regulatory and policy alignment
  Confirm what is permissible for your jurisdiction(s), customer classes, and rate/tariff framework. 
• Customer experience and transparency
  Clearly explain what the fee is for, when it applies, and how customers can avoid it (e.g., ACH, cash, online banking, in-person). 
• Channel consistency
  Decide whether the same fee logic applies across web, mobile app, IVR/agent-assisted, and walk-in channels. 
• Segmentation
  Consider differences between residential vs. commercial, one-time vs. recurring, and low- vs. high-balance payments. 
• Affordability safeguards
  Evaluate hardship scenarios and ensure customers retain accessible, low-cost payment options. 
• Measurement
  Track impacts on payment mix, autopay enrollment, call volume, failed payments, and customer complaints.

Utility commissions have explicitly addressed third-party payment vendor fees and the principle that customers who choose fee-based electronic payment options can bear those fees rather than shifting them to all ratepayers (see California Public Utilities Commission Resolution W-5243, 2021). 

In parallel, Federal Reserve Financial Services’ FedCash® Services 2024 Findings from the Diary of Consumer Payment Choice reinforces a key utilities design reality: Customers use a mix of payment instruments, and cash remains an important option for some segments (especially lower income and older consumers) and for small dollar payments.  Therefore, fee strategies should preserve accessible, low- or no-fee alternatives (e.g., ACH, cash/walk-in) and be especially careful with flat fees on partial or low-balance transactions. 

Best when simplicity is the top priority, but it may not reflect the true cost of very small or very large payments.  

A flat fee is a single, fixed dollar amount applied to each eligible transaction (e.g., “$2.95 per card payment”), regardless of the bill size. In utilities, this is most often used as a one-time fee for online or pay-by-phone card payments, especially in guest-pay flows, because it’s straightforward to disclose and easy for customers to compare against no-fee options like ACH or cash. The tradeoff is that flat fees can over-recover on small payments (such as a $20 partial payment) and under-recover on large payments (such as a $400–$600 catch-up bill). Many utilities mitigate this by pairing a flat fee with clear “before you pay” disclosures and by defining, up front, whether the same flat amount applies to partial payments, multiple payments in a billing cycle, and recurring or autopay transactions. 

Uses fixed fees by payment bands, offering a middle ground between simplicity and stronger cost alignment.  

A tiered fee applies different fixed dollar amounts based on the payment size; for example, one fee for payments under $100, a higher fee for payments from $100 to $300, and another for larger balances. This approach gives utilities a middle ground between a flat fee and a fully percentage-based model. It is still relatively easy for customers to understand, but it can better reflect how acceptance costs rise as ticket size increases. Tiered fees are often useful when bill amounts vary widely across seasons or customer segments, because they reduce the risk of charging the same fee for a very small partial payment and a much larger catch-up payment. The design challenge is making the thresholds intuitive and clearly disclosed so customers understand why the fee changes at certain payment amounts, especially in digital, IVR, and autopay experiences. 

Tracks most closely with payment size, but it requires especially clear disclosure and customer-experience testing.  

A percentage-based fee is calculated as a share of the payment amount, such as 2.5% of the card transaction, and may include a minimum or maximum cap to prevent the fee from being too low on small payments or too high on large ones. For utilities, this structure offers the strongest cost alignment because the fee scales directly with the bill amount, which can be especially relevant when customers pay higher seasonal balances, arrears, or large commercial invoices. The tradeoff is that percentage-based fees can feel less predictable to customers than a fixed-dollar fee, so the payment experience needs especially clear disclosure of both the percentage and the resulting dollar amount before the customer submits payment. Utilities considering this model should also test how it affects conversion, partial-payment behavior, and autopay enrollment, since even a well-aligned fee can create friction if it is not presented simply and transparently. 

What payment methods do your customers use most today, and what are the fully loaded costs by method and channel? 

• Do you offer autopay or recurring card payments today, and if so, how do you handle fee policies for recurring transactions? 
• Are current maximum payment limits creating friction (e.g., partial payments, repeat calls, multiple transactions)? 
• What customer communication, disclosure, and accessibility requirements must be met? 

How will you handle exceptions (hardship, low-income programs, critical-care customers, or other protected classes as applicable)? 

For utilities, this update is not simply about whether a new fee can be added. It is about whether your current payments experience still makes sense as digital usage grows, autopay becomes more important, and card-acceptance costs continue to shift. The right approach will depend on your regulatory environment, customer expectations, payments mix, and the low-cost alternatives you want to preserve. 

For billers, the most important question is not whether a service fee is available. It is whether your fee strategy still fits the realities of your business, including bill size variability, autopay growth, customer communication requirements, and channel-by-channel performance. If you are evaluating a change, ACI can help you assess your current payments mix, model fee scenarios, review rollout considerations, and identify practical guardrails to reduce customer friction and compliance risk.