Most merchants in the U.S. are starting to repay some of the savings they realized from the Durbin amendment that became effective October 2011. In April 2012, Visa and MasterCard implemented new fees and increased some interchange rates that will now cost most merchants anywhere from a few dollars to a few hundred thousand dollars per month.
The most significant of all the new fees and rate changes is the introduction of Visa’s Fixed Acquirer Network Fee (FANF). Effective for activity beginning April 1, 2012, this fee applies to the acceptance of all Visa-branded products. This fee is charged to a merchant's acquirer or credit card processor based on a merchant’s size and number of locations. Most processors have announced that they intend to pass this fee on to their merchants.
The calculation of this fee is extremely complex for large merchants with many locations, multiple MCCs, and a mix of card present and card not present sales. It is based on a number of variables, including:
- Number of taxpayer IDs
- Card present vs. card not present
- Merchant Category Codes (MCCs)
- Number of locations
- Visa gross monthly sales volume
Visa is offering rebates or incentives to some of the largest merchants in the U.S. to cover the cost of the FAN fee for 2012. Therefore, it is important for merchants to estimate their FANF liability and explore potential incentives with their acquirers. It is uncertain, and I think unlikely, that these incentives will continue on to 2013 and beyond.
It is important for merchants to understand their liability for these fees and seek out ways to manage the increased costs.