Whether or not you have a high-risk merchant account instant approval, you’ll be faced with several fees when processing payments. Your payment processor will charge some of these fees to cover operating costs and generate profit, while credit card networks will pass other costs directly to you.
The FANF, or Fixed Acquirer Network Fee, is a fee that comes directly from Visa and generates no profit for your payment processor. If you’re wondering more about the FANF fee, we’ve outlined below some key points about the fee and how it applies to your business.
What Is the Visa FANF Fee?
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Visa devised the FANF fee in 2012 to offset revenue losses resulting from the Durbin Amendment, which aimed to regulate payment processing and lower bank-imposed fees. Consequently, many banks have responded to the amendment by increasing costs in other areas. Visa’s FANF is one of these examples.
The FANF was previously known as the Network Participation Fee, one of many fees that you can’t avoid paying. Like interchange and assessment fees, your payment processor has no control over the charges. But the FANF has not existed without its share of scrutiny. In 2012, the United States Department of Justice antitrust division opened an investigation into Visa and its FANF fee. However, no changes have resulted from the research.
Is Your Business Affected By the FANF Fee?
The FANF affects all businesses that accept Visa cards. However, depending on the type of activity, its sales volume, location number, and payment environment, the effect will be different.
Visa categories businesses based on many factors and uses these elements to charge higher or lower fees. To determine where you fit in the structure, ask yourself the following questions:
- Are you a high-volume business (not fast food) that operates in a card-present environment? If you are, you will pay a higher fee than a low-volume business.
- Are you a low- or high-volume business (not fast food) that operates in a card-present environment and you have more than three locations? If you are, you will pay a higher fee than businesses with fewer locations.
- Are you business (including fast food) that operates in a card-not-present environment? If so, what is your gross monthly sales volume? The higher your sales volume, the more you can expect to pay in fees.
- Are you a charitable or social service organization (MCC 8398)? If you are, Visa will waive your FANF fee.
If you’re wondering whether you qualify as a high-volume merchant, consider your merchant category code (MCC). High-volume merchants include airlines (MCC 3000-3299), lodging (MCC 3500-3999, 7011), discount stores (MCC 5310), time-shares (MCC 7012), and motion picture theaters (MCC 7832), to name a few. Visa maintains a comprehensive listing of its merchant category codes.
How Much Can You Expect to Pay in an FANF Fee?
Since the FANF is charged based on a tier structure, you could discover difficulties understanding how much you’re supposed to pay. Think about whether you operate in a card-present or not-card-present environment. Then, consider your total locations (card-present environments) or sales volume (not-card-present environments). Depending on what your business does and how it operates, your FANF fee may be as little as $2. If your company is large, you could pay a considerable amount. Visa also maintains a complete FANF fee structure.
As for paying the FANF fee, the fee gets calculated monthly, but you’re charged quarterly.
How Can You Deal With the FANF Fee?
While individual merchants can’t avoid paying an FANF fee, you may be able to avoid paying fees for PCI compliance and early termination, for example. If you’re a high-volume business, you can also reduce the risk of paying more fees by opting for a high-risk merchant account. While some payment processors charge higher overall fees to high-volume businesses or deny accounts entirely, high-risk merchant service providers understand the complexities of high-volume sales.
If you accept Visa as payment at your business (whether you have a high-risk business or not), you won’t be able to avoid the FANF fee completely. However, you should understand how the FANF works so that you can continue making the most informed financial decisions for your business both now and in the future.