In April, Visa has introduced a new fee called Fixed Acquirer Network Fee (FANF) which is quite complicated to calculate and results in significant new fee that all credit card processors must pay to Visa for the privilege of accepting their cards. The fee is charged based upon your businesses volume of card present/swiped and card not present/keyed transactions.
Here’s an example:
If you’re a retailer who has a single location and you swipe credit cards you’ll pay Visa a new fee of $2.00 for FANF starting in April. If you also manually enter card numbers you’ll pay an additional fee based on the volume of those keyed transactions. So if you process $10,000 in keyed transactions you’ll also pay $15.00 to Visa directly for FANF. So now you’re paying an additional $17.00 per month to Visa. To help you determine how much your business will pay see our Visa FANF Flow Chart flow chart. If you need any assistance calculating your FANF fee call us and we’ll help you do the math, as this is one of the most complicated fees ever introduced.
So, why are merchants paying these new fees?
Let’s be honest, the Durbin Amendment to the Financial Services Reform Law that was enacted in October 2011 forced Visa and MasterCard to reduce the cost for Debit card transactions, but unfortunately it was short-sighted and not well reasoned for a couple reasons:
#1 Senator Durbin simply didn’t understand that the rates set by Visa/MasterCard for debit cards is not always the rate that your business will pay unless you have interchange plus pricing as offered by Leap Payments. Most providers never offer interchange plus or cost based pricing to their clients, as they prefer to set specific higher rates for each card transaction. So while Leap Payments clients immediately enjoyed these debit card savings, most merchants never saw a penny of savings. We find that most providers are simply too greedy to pass along Durbin savings to their clients so the legislation only resulted in Visa/MasterCard’s earnings reduction that they had to make up somewhere else.
#2 Senator Durbin also didn’t consider that if you mandate a rate cap for debit cards then the card associations will simply increase the fees for other card types or go as far as Visa has now gone and introduce entirely new fee types such as FANF to impose on merchants. Let’s remember that Visa and MasterCard are for-profit publicly traded companies, so they’re motivated to provide the highest shareholder value possible. When you use legislation to limit the price on a single product offered by a for-profit company their reaction will be to increase other fees or introduce new fees to offset their lost revenue. Bank of America tried to introduce monthly debit card fees to consumers to offset Durbin reductions but due to the massive consumer backlash they had to reverse their decision. Now Visa is doing the same thing to business owners with FANF, and frankly we shouldn’t stand for it.
We say enough is enough. If you’re as mad as we are about these new fees write to Senator Durbin and tell him that his legislation didn’t work and you the business owner are now paying for it. Here’s a link to his webpage to send your comments: http://durbin.senate.gov/public/index.cfm/contact
