New Visa and MasterCard Processing Fees

Effective April 1, 2012 the bank card networks will introduce new fees for merchant acquirers, according to information in Digital Transactions News. The most significant fee is Visa Inc.’s new Fixed Acquirer Network Fee (FANF).  MasterCard Inc., meanwhile, is adding two new network fees and is expected to introduce a new debit interchange rate in the controversial small-ticket sector.

In recent weeks, the networks began revealing some of the details about this new pricing in bulletins to merchant-acquiring banks.  In most cases, the acquirers have begun informing their independent sales organizations (ISO’s) and other merchant processors.

This new fee is different than interchange in that it is booked as Visa’s own revenue instead of being paid to card issuers, like interchange.  Acquirers typically pass such fees on to their merchant clients so, as a merchant, you should keep an eye out for them on your upcoming processing statements.

While this fee goes into effect April 1st, the collection of it, from the merchant, won’t actually take place till July.  The FANF is a monthly fee that will affect all merchants, but, will be collected quarterly.

The FANF is a complicated affair but here’s some basics on how it will play out. The MCC used to classify a business plays a role in the amount of the FANF charged each month. The main factor in determining the amount of the FANF is whether a business processes the majority of its transactions in a card present or card not present environment.

Here is how it will work, according to information from processors and a new report about network pricing from New York-based securities firm Keefe, Bruyette & Woods:

• For card present businesses like retailers:    The amount of the Fixed Acquirer Network Fee for card present businesses will be based on the number of locations. Businesses with one location will be charged $2 – $2.90 a month, up to $85 a month for businesses with 4,000 or more locations. The MCC of the business plays a role in determining the FANF as well.
• For card not present businesses like e-commerce operations:  For card-not-present merchants, merchant aggregators, and fast-food restaurants, the monthly fee will be assessed based on Visa volume and range from $2 for sales of $50 or less up to $40,000 for merchants with more than $400 million in gross sales. The fee table in this category reportedly has at least 16 tiers. A merchant with just over $5 million a month in Visa volume would pay $1,500 per month, according to Joe Garza, senior vice president of North American Alliances at Toronto-based merchant acquirer Moneris Solutions’ with U.S. headquarters in Schaumburg, Ill.For example, card-not-present business processing between $8,000 and $39,999 will be hit with a Fixed Acquirer Network Fee of $15 a month opposed to just $2 for a card present business with similar volume and one location.

Visa will waive the FANF for charitable organizations classified under merchant category code 8398. Exactly how the fee will be waived isn’t quite clear at the moment, but early indications are that Visa will charge the FANF and then provide a rebate at a later date.

At this point, the complexities and varying amount of the FANF leave us in the industry, with many questions.  We do, however believe that these new fees will certainly be passed by processors and acquirers directly to businesses on both bundled/tiered and interchange pass through pricing models.   Once again, you will want to consult your processing statements to look for any indications regarding this fee.

And you thought understanding your processing fees were complicated before????  As you see information, make certain to get a thorough explanation from you rep.  And, as always, if you’re not getting a comprehensive understanding of fees, contact me.  Thanks for reading.

Share this article