Merchants Discover Misleading Credit Card Processing Fees

I want to thank Practical Ecommerce readers for their comments on my last article series, “How to Identify Dubious Credit Card Processing Fees.”  I also appreciate readers sending me suspicious provider activity, as I use those submissions to educate everyone.

Several merchants sent me their statements with suspicious fees. Some of the fees were actually legitimate. But several were dubious. Price increases hidden in the card company fees and inflated card companies fees are among the most misleading tactics used by some providers. They use these tactics because they presumably know they can tell the average merchant, “It’s a Visa or MasterCard fee and we no control over it.”

Below are some examples I found from the statements merchants sent me.

Rate Increase Hidden in Assessment Fees

Two merchants sent the same suspicious activity from their provider. Both merchants noted an increase in their assessment fees from March to April. One of the ways Visa, MasterCard, and Discover make money is by charging an assessments fee. They charge the fee to the provider and the provider should simply pass the actual fee through to the merchant. As noted in “Part 1” of my series in March, the assessments fee for Visa is 0.11 percent; Discover is 0.105 percent; and MasterCard charges 0.11 percent for sales below $1,000 and 0.13 percent for sales above $1,000.

Both merchants were charged those fees in March. However, these fees increased to 0.184 percent, 0.175 percent, 0.184 percent, and 0.217 percent in April. They both said their provider sent a notification citing card company changes causing fee increases. Also, one merchant stated that she called customer service personnel about the fee increase and felt as though the answer given was scripted.

Interestingly, the parent company of this provider was breached a couple years ago and fined around $100 million. Regardless, there have been no recent increases to the assessment fees and none of the recent card company changes justified a wholesale increase to this fee. In my view, this is simply a price increase hidden in the assessment fees.

Inflated FANF Fee

Visa charges merchant account providers a Fixed Acquirer Network Fee (FANF). This fee is different for brick-and-mortar businesses and ecommerce businesses. Brick-and-mortar businesses, with the exception of fast food restaurants, pay based on the number of locations. Ecommerce and fast food restaurants pay based on their volume. Here again, providers should simply pass-through the fee to the merchant. But some providers inflate the fee because they know the merchant will believe the increase comes from Visa.

One merchant sent me several statements. He didn’t know why this fee would vary from $22.50 to $67.50 each month. In fact, for ecommerce merchants this fee can vary monthly because it is based on the Visa transaction volume each month. Also, understand that the fee you see on this month’s statement is likely based on last month’s volume.

What caught my eye was the fact that the fees were not whole numbers. An ecommerce merchant that processes $50 to $199 in the month will be charged $2.90. Other than that $2.90 amount, FANF fees are always whole numbers. For example, an ecommerce merchant that processes $8,000 to $39,999 should be charged $15.00. An ecommerce merchant that processes $40,000 to $199,999 should be charged $45.00. An ecommerce merchant that processes $200,000 to $799,999 should be charged $120.00, and so on.

This merchant was processing between $10,000 and $50,000 in Visa transactions each month. Therefore, his FANF fee should have been either $15.00 or $45.00 depending upon his volume for the month. However, the provider was charging $22.50 and $67.50 each month — increasing the FANF fee by roughly 50 percent.

Inflated International Fees

I listed the correct international fee in “Part 1” of the series in March. The card companies assess this fee when a customer uses a card issued outside of the U.S. to purchase goods and services in the U.S. For example, Visa charges an “Int’l Service Assessment Fee” of 0.40 percent and a “Visa Int’l Acquirer Fee” of 0.45 percent for these types of purchases.

But a merchant who contacted me was paying 0.90 percent for the Int’l Service Assessment Fee and 0.95 percent for the Visa Int’l Acquirer Fee. The MasterCard international fees were also inflated. A typical merchant may think the inflated amount is not significant. But it is. This ecommerce merchant was paying up to $10,000 per year extra because of these inflated international fees.

Inflated Access Fees

The number of inflated card company access fees that I saw is too numerous to list. Recall that one of the ways the card companies make money is by charging a per-transaction fee. Visa charges an “APF” fee of 1.95 cents for credit cards and 1.55 cents for debit cards. MasterCard charges a 1.95 cent “NABU” and Discover charges a 1.85 cent “Data Usage” fee. Some providers show these as an “Access fee” on the statement versus the card company verbiage. I’ve found that if the term “Access Fee” is used instead of the actual card company verbiage there is a higher probability (but not an absolute) that the fee is inflated. I’ve also seen the card company verbiage used and the fee is still inflated to as high as 10 cents.


  • Remember, there are no enforced standards in the card processing industry.
  • A provider that inflates card company fees is a good one to avoid.
Phil Hinke
Phil Hinke
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