Posts Tagged ‘FANF’

Visa FANF will affect many Non-Profits

Red Alert:  If you are a non-profit, you could be adversely affected by Visa’s new fees called FANF.   Read on to find out if you are affected.

What is FANF?

Fixed Acquirer Network Fee
On April 1, 2012, Visa initiated a new Fixed Acquirer Network Fee (“FANF”) assessed to acquirers on a merchant Taxpayer ID basis, which many processors started passing through to merchant’s in May 2012.

The new FANF charge will result in additional charges for all businesses that accept Visa credit and debit cards, regardless of who their merchant services provider is.  Here’s the rub:  It also will affect most Non-Profits!  It doesn’t matter what processor you use.  They may pass them on quarterly or monthly.  But they will pass them on.

How FANF rates are calculated Businesses

Separate FANF charges will be imposed on (i) merchants processing transactions where a cardholder is physically present (“CP Merchants”), with the exception of merchants primarily operating as Fast Food Restaurants and (ii) merchants processing transactions where a cardholder is not physically present (“CNP Merchants”), which shall include merchants acting as merchant aggregators for other merchants, or merchants primarily operating as Fast Food Restaurants (MCC 5814). If a merchant falls into both categories described above, the merchant will be charged the FANF charge and the MSP Network Fee as both a CP Merchant and a CNP Merchant. The MSP Network Fee will be charged to all CP Merchants and CNP Merchants regardless of the type of merchant.

For CP Merchants with less than 50% of their monthly Card Present sales volume from the High Volume Merchant Category Codes (“High Volume MCCs”) listed below, the FANF charges will be assessed on a per location basis, with fees ranging from $2.00 FANF per location per month for CP Merchants with one to three locations to over $24.00 per location per month for CP Merchants with more than 250 locations.

For CP Merchants with at least 50% of their monthly Card Present sales volume from the High Volume MCCs listed below, the FANF charges will be assessed on a per location basis, with fees ranging from $2.90 FANF per month for CP Merchants with one to three locations to over $5.00 FANF per location per month for CP Merchants with more than 20 locations.

How Charities and Non-Profits are affected by FANF 

When you set up your merchant account, you are given an assigned code within the system by your representative.  It is important to know if you have the right code entered to ensure you are accounted for correctly.

This is an explanation that just came through one of the processors I work with:

An exception to FANF involves the assignment of MCC 8398, and merchants must be eligible. Visa considers the following criteria to determine eligibility. If any of these conditions are not met or Visa should determine the merchants business model is more in line with another MCC, even if closely related to 8398, FANF applies. And if we misclassify a merchant, Visa may revisit these criteria for up to 2 years and bill back accordingly.

1. The Tax ID must be registered as a 501(c)(3) with the IRS

2. 50% or greater of the Visa volume is in MCC 8398

3. Merchant properly coded with the MCC 8398

So is your merchant 8398?

8398 – Charitable and Social Service Organizations
Merchants classified under this MCC are non-political fund-raising organizations (organizations engaged in soliciting contributions) and social service organizations engaged in social welfare services. This MCC includes advocacy groups, community organizations, and health agencies. Although Charitable and Social Service Organizations may conduct much of their business in a non-face-to-face manner, they are not considered direct marketing merchants because they do not directly solicit their business primarily through catalogs, brochures, telemarketing, etc. These merchants’ transactions should be classified under this MCC, but each card-not-present transaction must be identified with the appropriate mail/telephone order or electronic commerce indicator value.

And here are a few business types most often misclassified as MCC 8398:

8641 – Civic, Social, and Fraternal Associations

Merchants classified under this MCC are associations engaged in civic, social, or fraternal activities. This MCC includes alumni associations and clubs, booster clubs, businesspersons clubs, community membership clubs, fraternal lodges, fraternities and sororities, social clubs, veterans’ organizations, and youth associations.

8651 – Political Organizations

Merchants classified under this MCC are membership organizations that promote the interests of a national, state, or local political party or candidate. This MCC also includes political groups organized specifically to raise funds for a political party or individual candidate.

8661 – Religious Organizations

Merchants classified under this MCC are religious organizations that provide worship services, religious training or study, or religious activities. This MCC includes churches, convents, monasteries, shrines, temples, and synagogues, among others.

8675 – Automobile Associations

Merchants classified under this MCC are automobile as­sociations and clubs. These merchants provide a variety of special services to its members such as travel and road condition information, maps and guides, and special rates at restaurants, hotels, and at car rental agencies. These merchants often charge an annual membership fee.

8699 – Membership Organizations (Not Elsewhere Classified)

Merchants classified under this MCC are organizations or associations that cannot be classified by another, more specific, merchant category code. This MCC includes historical clubs, labor unions, poetry clubs, art councils, and tenant or condominium associations. This MCC does not include membership to health and athletic clubs; these merchants must be classified under MCC 7997—Membership Clubs (Sports, Recreation, Athletic), Country Clubs, and Private Golf Courses.

Take steps to protect your organization.  Make sure you are classified in the right category and be prepared to have fees assessed in addition to your regular ones should you not be an 8398 qualifying organization.

If you have any questions concerning your status, your billing, your options, I would be happy to review your current situation and offer a non-biased evaluation.

Lynda Colter-Bergh



Read Full Post »

We knew it wouldn’t be long before we saw the industry squirm around the Durbin Amendment that gave Merchants a break on Credit/Debit cards from the Big Banks.   On April 1, 2012 the bank card networks introduced new fees that will almost certainly be universally passed on to Merchants.

New MasterCard Fees

New Fees Alert

MasterCard Inc. is adding two new network fees and is expected to introduce a new debit interchange rate in the controversial small-ticket sector.

New Visa  Fees

The most significant fee is Visa Inc.’s new Fixed Acquirer Network Fee (FANF).   Merchants won’t actually be affected until July. The FANF is a monthly fee that will affect all merchants, but, will be collected quarterly.

These new fees are different than interchange in that they are booked as Visa’s own revenue instead of being paid to card issuers (Banks), like interchange.

Like everything else in Merchant Services, FANF is confusing and complicated so I’ll try to break it down to bite-sized pieces. The MCC  (VISA Merchant Category Classification Code) you are designated by plays a role in the amount of the FANF charged each month.

The main factor in determining the amount of the FANF is whether a business processes the majority of its transactions in a card present or card not present environment.

For card present businesses like retailers

The amount of the Fixed Acquirer Network Fee for card present businesses will be based on the number of locations.  Businesses with one location will be charged $2 – $2.90 a month, up to $85 a month for businesses with 4,000 or more locations.  Again, this will show up quarterly on your statement.

For card not present businesses like e-commerce operations

For card-not-present merchants, Third Party Merchant Aggregators1, and fast-food restaurants, the monthly fee will be assessed based on Visa volume and range from $2 for sales of $50 or less up to $40,000 for merchants with more than $400 million in gross sales. The fee table in this category reportedly has at least 16 tiers.

E-Commerce will be hit harder

A card-not-present business processing between $8,000 and $39,999 will be hit with a Fixed Acquirer Network Fee of $15 a month opposed to just $2 for a card present business with similar volume and one location.  (Remember, more locations, though means more fees.)


Visa will waive the FANF for charitable organizations classified under merchant category code 8398. Exactly how the fee will be waived isn’t quite clear at the moment, but early indications are that Visa will charge the FANF and then provide a rebate at a later date.

1Third party payments aggregation (TPPA) is a description used for merchants that are selling a product or service that they do not own. The best example of a TPPA (aggregator) is PayPal. They simply facilitate the exchange of money between two parties.

Read Full Post »