Payment Processing Fees Added in 2012
The major credit card networks — Visa, MasterCard, Discover and American Express — join together to set the fees for Interchange. As part of this process, every six months they review those fees and adjust them as needed. In 2012, a series of new fees have been added to payment processing. Some of them are even completely separate from Interchange.
Here is a comprehensive list of all fees that have been adjusted or added this year:
Visa introduced a trio of new fees, effective April 1, 2012:
- A Transaction Integrity Fee
- Revisions to its Network Acquirer Processing Fee
- A Fixed Acquirer Network Fee (FANF)
Transaction Integrity Fee: Visa’s Transaction Integrity Fee is a new $0.10 fee that will apply to U.S. domestic regulated and non-regulated purchase transactions made with a Visa Debit card or Visa Prepaid card that fail or do not request Custom Payment Service (CPS) qualification. The CPS rates are Visa’s best rates and apply to both regulated and non-regulated transactions. This new fee can be viewed as a definite response from Visa to the Durbin Amendment’s interchange rate cap and finance reform/regulatory changes. It is completely separate and new, not tied to interchange at all.
Network Acquirer Processing Fee: The Network Acquirer Processing Fee on Visa-branded signature debit was reduced — going from $0.0195 per authorization to $0.0155 per authorization. The fee for credit card authorization remained $0.0195 per authorization.
Fixed Acquirer Network Fee: FANF applied to the acceptance of all Visa-branded products and is based on both the size and the number of merchant locations. The FANF fee was initially based on volume reported in July 2012. Visa required all U.S. acquirers to provide new merchant location reporting for the tracking of this fee. The new reporting requirements included a monthly breakdown of acquired merchants, number of merchant locations, and merchant sales volume by merchant Taxpayer ID. For Card Present merchants, with the exception of Fast Food Restaurants, a merchant Taxpayer ID with physical locations were assessed FANF on a per-location rate basis. For example, Card Present Merchants with one to three locations saw a pass through per location per month fee of $2. Price per location per month increased according to the number of locations — upwards of $65 month for merchants exceeding 4000 locations. Card Present High Volume MCC Merchants with one to three locations saw a pass through per location per month fee of $2.90. Price per location per month increased according to location — upwards of $85 month for merchants exceeding 4000 locations. Customer Not Present, merchant aggregators and merchants primarily operating as Fast Food Restaurants (MCC 5814) were assessed based on gross merchant sales volume originating from any Visa-branded card. Merchants that fall into this category with monthly gross sales volume ranging from less than $50 a month on the low end will see a $2 a month fee- to merchants with gross sales exceeding $400 million at a $40,000 a month fee. There are some 18 tiers, with a merchant falling into a volume tier of $8,000 to $39,999 a month seeing a new $15 per month FANF fee.
Visa waived the FANF for eligible Charitable and Social Service Organizations (MCC 8398).
MasterCard also debuted new fees, which took effect July 2012. One of those new fees MasterCard will introduced was a new Annual License and Registration Fee. MasterCard also announced a new Annual Type III Third Party Processor (TPP) Registration Fee. These fees are calculated based on full year 2011 volume. For 2012 only, each of the new fees are 50% of the total fee calculated — because the added fees only cover half of 2012 (July 1, 2012 – December 31, 2012). These fees were passed through on a pro-rata basis. All acquired MasterCard credit and signature debit volume is utilized to determine annual volume for both programs. PIN debit volume is excluded. In addition, MasterCard introduced new Regulated debit small ticket debit and credit Interchange programs in April 2012.
And in October 2012, MasterCard enacts these new fees that were just announced: MasterCard will be reducing the Consumer Debit rate from 1.64% + $0.16 to 1.60% + $0.15. MasterCard will also increase the Small Ticket Debit rate from 1.30 + $0.02 to 1.30 + $0.03.
Discover introduced a US Commercial Large Ticket Interchange Program in 2012. Discover also increased its assessment fee by .005%.
One of the bigger changes for Discover was they changed existing card present Interchange rates for transactions less than $15 for Express Service merchants (Local Commuter, Bus Lines, Toll & Bridge Fees, Restaurants, Fast Food Restaurants, News/Dealer Stands, Laundries-Family Community, Dry Cleaners, Quick Copy & Reproductions, Parking Lots/Garages, Car Washes, Motion Picture Theaters and Video Entertainment Rentals) and less than $25 for Taxi/Limos.
Discover Card will also be enacting several changes to their PSL Public Services interchange fee programs. Rates will increase from 1.50% +$0.10 to 1.55% + $0.10. Discover PSL Card-Not-Present/E-Commerce Premium Plus will increase from 2.30% + $0.10 to 2.35% + $0.10. Discover will also increase Key Enter Premium Plus from 2.10% + $0.10 to 2.15% + $0.10.
What This Means for HMS Customers?
Host Merchant Services wants to assure its customers that it sticks by its guarantee: HMS will never increase its fees for our customers. HMS continues to offer the guaranteed lowest rate and that rate is frozen. Unfortunately, Card Association Fees are not part of any current pricing model. They are also mandated and initiated by the credit card companies themselves — Visa, MasterCard and Discover. All processors everywhere will be adding them to their pricing structure. Some of these changes are made directly to Interchange rates from the Card Associations. And still others — like Visa’s much ballyhooed FANF — are a completely new fees and not subject to regulation from the Durbin Amendment. Merchants will begin to see the following text on their August Statements to explain the changing fees:
Visa, MasterCard, Discover Card Services have announced category introductions and modifications to their current interchange structures. These changes may affect your current pricing effective October 2012. Further detail specific to these changes and impacts to your merchant account will be detailed on your September merchant statement. As previously disclosed on your February and March merchant statements, MasterCard introduced the new MC licensing fee. Beginning in August 2012, the new licensing fee of $.005 will be included with the MasterCard NABU billing and appear as “MC assoc NABU/license fee”. Thank you for your continued business.