Trying to budget for credit card transaction fees is tough.
It’s tempting to think that it could be a lot easier – a flat fee or percentage would seem to do the trick. If your business processes Visa card payments, however, you’re probably somewhat familiar with the seemingly unpredictable FANF fee that appears on a monthly basis.
The reason it seems to vary so wildly is that the FANF fee is calculated based on a number of details about your business as well as the nominal dollar amount of visa transactions every month.
This article is intended to help you understand the Visa FANF fee and provides a step-by-step process for calculating your monthly FANF bill.
What is FANF?
FANF stands for Fixed Acquirer Network Fee which covers the cost of processing Visa transactions for your business. It does not yield any profit for the Visa corporation; it’s intended only to pay for the overhead involved in helping you do business.
Visa introduced FANF in 2012 as a way to add transparency to its profit structure. FANF would cover the cost of doing business, and additional fees make their profit.
While it’s good information to know, it doesn’t exactly help you in planning a budget for it.
How the FANF fee is determined
The size of your FANF is determined by a number of factors, and Visa actually calculates it on a monthly basis.
For each month, Visa considers the following factors:
- The number of physical “card-present” locations owned by the merchant.
- Monthly gross sales volume (total dollar amount of visa transactions between all locations).
- Whether “card-not-present” (e.g. online sales) occurred.
- Special cases for fast food and unattended terminal transactions.
- Type of business, as determined by Merchant Category Code (MCC).
Between all of these factors, the calculation can get a little tricky.
Let’s start by defining gross sales volume. This is the total dollar amount of Visa transactions done by your business in a given month. If you make less than $200 in Visa sales in a month, your FANF for that month is zero.
The number of physical locations you operate is pretty straightforward. Note, that this is not the number of terminals or point of sales systems you have. It’s technically the number of distinct stores your business is licensed to operate and are currently open. Two separate stores under separate licenses in the same mall, for example, are considered two locations. Two separate counters in the same building under a single license are considered one location.
Card-not-present sales is a true or false category. If you process one cent from a Visa card in a card-not-present transaction, there’s an additional fee for that month. If you have an online business but have no online (or any card-not-present) Visa transactions in a given month, you will not be subject to this additional fee.
If you operate a fast food restaurant or any unattended terminal transactions occur at any of your physical locations, you are subjected to this same fee (but not in addition to the card-not-present fee.)
Your business’s MCC will determine whether or not you qualify as a “high volume MCC” type business. Take a look at Wells Fargo’s helpful list of Visa’s high-volume MCC’s to see if your business is in this category.
How to calculate your monthly FANF
Take a minute to understand all of the five categories listed above. Then, compile the following information:
- Total (gross) sales volume of Visa transactions for the month in question.
- Number of physical stores for your business (zero if online business with no card-present transactions).
- Answer “true” or “false” to this question: “Did you process any card not present (online) Visa transactions OR is your business a fast food restaurant OR did you process any Visa transactions at an unattended terminal?”
- Is your Merchant Category Code on this list?
Once you have this information, you’re ready to calculate your monthly FANF. It’s composed of two components, and you’ll need to calculate both separately.
Remember, if your total Visa transactions for the month are LESS THAN $200 (up to $199.99), your FANF for that month will be zero (no need to continue!).
Monthly Fee Component #1:
If yours is an online business with no card-present transactions, this component is zero (move on to component #2).
If your gross monthly sales were between $200 and $1,250 and some of your Visa transactions were card-present (physical stores) transactions, component #1 is 15% of your gross sales volume.
If your gross sales volume was greater than $1,250, use the answer to question 2 to identify your billing tier for the month. (If you answered “yes” to question 4, use this chart. If “no,” use this chart.) The chart will give you an explicit fee-per-location based on the number of locations you have. So, multiply the number of locations by the dollar amount in the column on the right corresponding to the number of locations you have to calculate the amount for component #1.
Monthly Fee Component #2:
If you answered “false” to question 3, component #2 is zero.
If you answered “true” to question 3, use this table to find the amount for component #2. Note that, for gross sales volumes between $200 and $1,250, this component is equal to 15% of your gross sales volume. This is true even if you have a nonzero component #1.
Once you’ve calculated these two components, simply add them together and you have your FANF for that month.
FANF: the bottom line
It may be a bit confusing, but it’s well worth calculating your FANF for budgeting purposes. Just follow these steps and make it a part of your monthly routine, and you’ll no longer be in the dark about where your FANF is coming from.
