What Every Merchant Should Know by Payex

MasterCard Adds a New Fee

May 14th, 2012

A month ago, we told you about the new fee coming your way courtesy of Visa: the Fixed Acquirer Network Fee. Now, in response to the Durbin Debit laws, MasterCard is making some changes as well.

So, what is happening exactly?

MasterCard is introducing a new Annual License and Registration Fee (ALRF) as well as a new annual Type III Third Party Processor (TPP) Registration Fee. The fees will be charged to merchant acquirers, who will likely have little choice but to pass these charges along to merchants.

According to MasterCard spokesman Seth Eisen:

“What we did is took a look at the value access to MasterCard’s network provides to acquirers as well as those who work with them … and reevaluated our acquirer fee constructs and then have made the decision to institute new or increased fees based on the value the network is providing,”

 

The really disappointing thing about all the changes from the Durbin Amendment and subsequent interchange rate changes is that big box retailers will see real savings, while small businesses will likely only see increases from the new interchange costs.

 

What will this end up costing you?

Unlike the Visa FANF which has an explicit (if not easily understandable) fee structure, the specifics of the ALRF are not clear. What we do know is that the fees will be directly proportional to all MasterCard volume excluding PIN debit volume.

MasterCard will begin collecting the fee in July, but it gets slightly more complex from there. For starters, MasterCard will be charging this new fee based on volume from 2011. However, the amount collected for 2012 will be 50% of the total fee calculated because it covers only half of 2012 (July 1, 2012 – December 31, 2012).

Remember, changes to Visa and MasterCard pricing affects all merchant processors across the United States. However, the method in which each processors chooses to pass the fees along to you can vary greatly. So, be on the lookout for both the MasterCard ANLF/TPP and the Visa FANF on future statements, and plan for how they might affect your business.

Check back at www.WhatEveryMerchantShouldKnow.com for more specifics about the ALRF and TPP charges when they become available.

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