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Revisiting Visa FANF

May 14th, 2012

 

Just last month, we told you about the newly imposed Visa Fixed Acquirer Network Fee (FANF). Introduced by Visa in response to the Durbin Amendment, FANF is affecting merchants and the payment industry in more ways than a simple price increase.

When Visa first announced the fee, which has technically been in effect since April 1st, they gave acquirers and merchants only 36 days notice. Such short notice was especially tough on payment processors because the new fee structure is setup in a way that processors have never seen before and therefore did not have the systems in place to account for..

So, why did Visa push through the Fixed Acquirer Network Fee so quickly? There doesn’t seem to be a good answer to that question. In fact, The Electronic Transactions Association (ETA) sent a request to Visa on behalf of acquirers, processors, and merchants asking for implementation to be delayed until all parties had a chance to review the complete details of the new fee and prepare for it properly.

The ETA’s request was quickly denied.

FANF is just another example of the card brands putting processors in a position to have to pass along new charges to their merchants.

“Any nominal increases we try to absorb the cost ourselves and avoid passing it to our merchants,” said Doug Mack, President of Payex. “Unfortunately in this case, Visa’s new fee structure is too significant for us to eat. We will, however, pass the charge along at cost,” he continued, “and not use it as a means to profit, as some processors are likely to do.”

The Fixed Acquirer Network Fee is determined from a somewhat complicated formula including card present vs. card not present charge types, merchant type, number of locations, and Visa gross monthly sales volume.

To help you understand how the new fees affect your particular business, the following tables lay out the charges for each merchant type and sale type.

Card Present (excluding High Volume MCCs)

Tier

Locations

Fee Per Location

1-3 1-3 $2.00
4 4 $2.90
5 5 $2.90
6 6 – 10 $2.90
7 11 – 20 $4.00
8 21 – 50 $4.00
9 51 – 100 $6.00
10 101 – 150 $8.00
11 151 – 200 $10.00
12 201 – 250 $14.00
13 251 – 500 $24.00
14 501 – 1,000 $32.00
15 1,001 – 1,500 $40.00
16 1,501 – 2,000 $50.00
17 2,001 – 4,000 $60.00
18 4,001 (max) $65.00

 

Card Not Present, Fast Food Restaurants, Merchant Aggregators

Tier

Monthly Gross Volume

Fee Per Month

1 < $50 $2.00
2 $50 – $199 $2.90
3 $200 – $999 $5.00
4 $1,000 – $3,999 $7.00
5 $4,000 – $7,999 $9.00
6 $8,000 – $39,999 $15.00
7 $40,000 – $199,999 $45.00
8 $200,000 – $799,999 $120.00
9 $800,000 – $1,999,999 $350.00
10 $2,000,000 – $3,999,999 $700.00
11 $4,000,000 – $7,999,999 $1,500.00
12 $8,000,000 – $19,999,999 $3,500.00
13 $20,000,000 – $39,999,999 $7,000.00
14 $40,000,000 – $79,999,999 $15,000.00
15 $80,000,000 – $399,999,999 $30,000.00
16 >= $400,000,000 $40,000.00

 

Card Present High Volume MCCs*

Tier

Locations

Fee Per Location

1 1 $2.90
2 2 $2.90
3 3 $2.90
4 4 $4.00
5 5 $4.00
6 6 – 10 $4.00
7 11 – 20 $5.00
8 21 – 50 $5.00
9 51 – 100 $8.00
10 101 – 150 $12.00
11 151 – 200 $18.00
12 201 – 250 $25.00
13 251 – 500 $35.00
14 501 – 1,000 $45.00
15 1,001 – 1,500 $55.00
16 1,501 – 2,000 $65.00
17 2,001 – 4,000 $75.00
18 4,001 (max) $85.00

 

*High Volume Merchant Types & SIC Codes

The following business types qualify as high volume and are subject to the High Volume MCC table:

3000-3299, 4511 – Airlines
3300-3499, 7512 – Auto Rental
3500-3999, 7011 – Lodging
4411 – Steamship/Cruise Lines
4829 – Wire Transfer Money Order
5200 – Home Supply Warehouse Stores
5300 – Wholesale Clubs
5309 – Duty Free Stores
5310 – Discount Stores
5311 – Department Stores
5411 – Grocery Stores and Supermarkets
5511 – Car and Truck Dealers/ New / used
5532 – Automotive Tire Stores
5542 – Automated Fuel Dispensers
5651 – Family Clothing Stores
5655 – Sports / Riding Apparel Stores
5712 – Furniture / Equipment Stores
5732 – Electronic Stores
5912 – Drugstores and Pharmacies
5943 – Stationary Stores
7012 – Timeshares
7832 – Motion Picture Theaters
5541 – Service Stations

 

Of course, what all of this means is that merchants will have a brand new monthly fee to contend with. FANF is billed to all payment processors in the United States, who will have little choice but to pass the fee on to merchants.

Please feel free to weigh in.  How do you feel these fees will impact your costs?  Do you feel it will be necessary to increase your prices as a result of this imposed fee from Visa?

Make sure to watch WhatEveryMerchantShouldKnow for more updates, and sign up for our newsletter to receive all the latest industry news and advice.

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