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Education
volume that payment facilitators find It would be impractical for a payment facilitator to only have card-present
attractive. Although these merchants transactions, so in reality, the FANF would be more than $2.90 for any single
typically pay higher variable fees, payment facilitator, but it would be far less than the sum of FANFs if each of its
they pay lesser monthly fees. sponsored merchants were charged individually. Even if the payment facilitator
were completely card-not-present, the maximum current FANF would be
Sponsored merchants are meant $40,000 per month for Visa volume in excess of $400 million per month.
to be smaller merchants, as they
are restricted to only processing Unfortunately, according to an April 15, 2014, Digital Transactions article by John
$100,000 per card brand annually. Stewart, FANF is set to change. Beginning in April of 2015, it will be based
Consequently, they will gladly on merchants or sponsored merchants individually by their tax ID numbers.
trade off a higher variable rate in Payment facilitators will no longer aggregate their volume to determine FANFs.
exchange for a lower monthly fee, The smallest card-present and card-not-present merchants and sponsored
especially if they can ignore all the merchants, processing less than $200 in Visa volume, will not incur FANFs.
other requirements associated with a
standard merchant account. This is a monumental impact on the systems and costs of payment facilitators
and their sponsored merchants. Because FANFs will now be based on sponsored
It is less expensive for a payment merchants' tax ID numbers, payment facilitators will now incur separate FANFs
facilitator to manage a sponsored for every sponsored merchant processing in excess of $200 monthly Visa volume.
merchant because the payment Further, payment facilitators will need to report volumes by tax ID and MCC.
facilitator typically only provides an
electronic statement and does not have I anxiously await the public forecasts from Visa to determine estimates of
to provide a form 1099-K to smaller the increase in its revenues and corresponding increase in costs to payment
sponsored merchants. Because of facilitators. Until then, I expect payment facilitators will adjust their pricing to
these reasons and because of the fee align with their cost structure, which unfortunately, with the stroke of a pen,
structure heretofore imposed by the indelibly shifted.
card brands, payment facilitators have
had a lower fixed cost structure to Ken Musante is President of Eureka Payments LLC. Contact him by phone at 707-476-0573 or by
maintain sponsored merchants than email at kenm@eurekapayments.com. For more information, visit www.eurekapayments.com.
traditional acquirers have had.
Thus, some payment facilitators do
not charge sponsored merchants a
monthly fee. The absence of this fee
is one advantage offered by larger
payment facilitators, like Square Inc.
Traditional merchants, however,
typically pay a monthly fee from their
acquirer and a fee from Visa called a
Fixed Acquirer Network Fee (FANF).
Visa implemented the FANF in 2012,
and single location card-present
merchants – defined as merchant
account(s) with the same federal tax
identification number and at the
same physical location accepting
card-present transactions – had a
maximum FANF of $2.90. The FANF
for card-not-present merchants,
however, is more complex and scales
upward in accordance with volume.
(See accompanying chart.)
The FANF is meted out at the
transaction level. If a single restaurant
processes $1 million per month
in card-present Visa volume and
$100,000 per month in card-not-
present Visa volume, its FANF would
be $45 for card-not-present activity.
49
volume that payment facilitators find It would be impractical for a payment facilitator to only have card-present
attractive. Although these merchants transactions, so in reality, the FANF would be more than $2.90 for any single
typically pay higher variable fees, payment facilitator, but it would be far less than the sum of FANFs if each of its
they pay lesser monthly fees. sponsored merchants were charged individually. Even if the payment facilitator
were completely card-not-present, the maximum current FANF would be
Sponsored merchants are meant $40,000 per month for Visa volume in excess of $400 million per month.
to be smaller merchants, as they
are restricted to only processing Unfortunately, according to an April 15, 2014, Digital Transactions article by John
$100,000 per card brand annually. Stewart, FANF is set to change. Beginning in April of 2015, it will be based
Consequently, they will gladly on merchants or sponsored merchants individually by their tax ID numbers.
trade off a higher variable rate in Payment facilitators will no longer aggregate their volume to determine FANFs.
exchange for a lower monthly fee, The smallest card-present and card-not-present merchants and sponsored
especially if they can ignore all the merchants, processing less than $200 in Visa volume, will not incur FANFs.
other requirements associated with a
standard merchant account. This is a monumental impact on the systems and costs of payment facilitators
and their sponsored merchants. Because FANFs will now be based on sponsored
It is less expensive for a payment merchants' tax ID numbers, payment facilitators will now incur separate FANFs
facilitator to manage a sponsored for every sponsored merchant processing in excess of $200 monthly Visa volume.
merchant because the payment Further, payment facilitators will need to report volumes by tax ID and MCC.
facilitator typically only provides an
electronic statement and does not have I anxiously await the public forecasts from Visa to determine estimates of
to provide a form 1099-K to smaller the increase in its revenues and corresponding increase in costs to payment
sponsored merchants. Because of facilitators. Until then, I expect payment facilitators will adjust their pricing to
these reasons and because of the fee align with their cost structure, which unfortunately, with the stroke of a pen,
structure heretofore imposed by the indelibly shifted.
card brands, payment facilitators have
had a lower fixed cost structure to Ken Musante is President of Eureka Payments LLC. Contact him by phone at 707-476-0573 or by
maintain sponsored merchants than email at kenm@eurekapayments.com. For more information, visit www.eurekapayments.com.
traditional acquirers have had.
Thus, some payment facilitators do
not charge sponsored merchants a
monthly fee. The absence of this fee
is one advantage offered by larger
payment facilitators, like Square Inc.
Traditional merchants, however,
typically pay a monthly fee from their
acquirer and a fee from Visa called a
Fixed Acquirer Network Fee (FANF).
Visa implemented the FANF in 2012,
and single location card-present
merchants – defined as merchant
account(s) with the same federal tax
identification number and at the
same physical location accepting
card-present transactions – had a
maximum FANF of $2.90. The FANF
for card-not-present merchants,
however, is more complex and scales
upward in accordance with volume.
(See accompanying chart.)
The FANF is meted out at the
transaction level. If a single restaurant
processes $1 million per month
in card-present Visa volume and
$100,000 per month in card-not-
present Visa volume, its FANF would
be $45 for card-not-present activity.
49
