What Every Merchant Should Know by Payex

New Fees Starting April 1

April 12th, 2012

With a mere 36 days notice, Visa is imposing another fee category on acquirers. Starting April, 2012, Visa will roll out the Fixed Acquirer Network Fee (FANF) which will have a noticeable effect on merchant account pricing. Let’s take a closer look at what FANF is all about and how it might affect you and your business.

What exactly is Visa doing?

In response to federal legislation regarding debit card fees and regulations, Visa is attempting to protect its Debit network by restructuring its pricing strategy. On one hand, there will be a reduction in the Acquirer Processing Fee, which will go down 21%, from 1.95 cents per debit authorization to 1.55 cents. However, as part of this restructuring, Visa is instituting a new charge known as the Fixed Acquirer Network Fee. Most likely, the acquirer will have to pass this fee through to merchants as a fixed monthly cost.

Bottom line: what will it cost you?

Unfortunately, it is not a straightforward answer. According to Keefe, Bruyette & Woods, a New York-based securities firm, the new fees should work as follows:

• For card-present merchants, the monthly FANF will start at $2 per month, per location, for business with one to three locations and $65 per month, per location, for merchants with more than 4,000 locations. High-volume merchants may see an even higher fee depending on volume and number of locations.

• For card-not-present merchants and fast food restaurants, the fee will be based on volume and will carry a charge from $2 per month, per location for sales volume of $50 or less up to $40,000 per month, per location for merchants with more than $400 million in gross sales. The fee table for card-not-present merchants will reportedly have at least 16 tiers.

Overall, the new pricing structure can result in lower overall fees for merchants, but likely only those with high volume and low average ticket price. For many other businesses, though, there will not be an overall decrease in charges and the new monthly fees can be quite high.

So, when will you start seeing these new fees?

Technically, the new fees were put in place starting April 1^st, leaving very little notice for acquirers and merchants.

In response, the Electronic Transaction Association submitted a request for Visa to put off the changes until acquirers had enough time to prepare and adjust for the new price structure. On March 12, Visa overruled the request made by the ETA.

Though Visa put the fee in place on April 1^st, FANF will be collected on a quarterly basis and Visa won’t actually start collecting from acquirers until July 1.

So, right now you have a short window in which to prepare for the new pricing. To help get an idea of what you might soon be paying, hop over to this Fixed Acquirer Network Fee Calculator.

 

As always, stay tuned to What Every Merchant Should Know for more updates on FANF and everything else happening in the world of Merchant Services.

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