Last week, the MasterCard credit-card company reversed a stance the company took months ago that almost caused the University to remove its services from the UT Web site, once again allowing UT students to use its cards.
Earlier this year, MasterCard officials objected to a new UT policy requiring students to pay a 1.75-percent fee per credit-card purchase, but no fee for direct debit payments online, said UT Chief Financial Officer Kevin Hegarty.
Their objections led UT officials to decide to take MasterCard services off the Web site this summer and make them only available via TEX, the University's automated telephone system, Hegarty said.
Because of previous disagreements with credit-card companies over the 1.75-percent fee charged to students, the University dropped Visa from its online services last year, Hegarty said. This left Discover as the only option for students to pay bills via credit card online.
But, just before MasterCard services were going to be taken off the Web site, MasterCard officials "came around and agreed with [the University]," Hegarty said.
"They have agreed that at least until the end of 2005 they will not object to our practice of providing free direct debit," Hegarty said.
Students will continue to pay a 1.75-percent fee to use Master-Card and Discover card services, he said, calling MasterCard's decision a "huge win" for the University.
MasterCard spokesperson Barbara Coleman confirmed this agreement in a written statement released Friday.
"We're pleased that University officials are preserving students' and parents' choice on how to pay for their college expenses," Coleman said.
The University's decision to charge a fee for students who use credit cards is a response to the "merchant fee" the University pays credit card companies each year, Hegarty said.
"It was costing us $2.5 million a year," Hegarty said.
The 1.75-percent fee became a way to recoup money the University paid the credit-card companies. This way, Hegarty said, only students who use their credit cards have to pay the merchant fee.
But Visa strongly objected to the fee because its rules require a fixed amount per transaction, not a percentage-based fee, and the University was forced to drop their
services, Hegarty said.
Other schools, such as Texas A&M University, have done the same, he said.
Credit-card use among students has dropped sharply from 50 percent, when Visa was still an option, to 25 percent.
This decision has impacted students like William West, an electrical engineering sophomore who came to the cashier's office Friday to pay an overdue tuition bill. Normally, he would have paid with his Visa, he said.
"I had to skip class to come here and pay in cash," said West. "It would be nice if they brought Visa back."
Hegarty said he continues to work with Visa over the fee issue.
"This caused a huge reduction in Visa volume and that hurts them," Hegarty said. "We're hoping they will come around."
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