The reality of Visa Inc.’s new Fixed Acquirer Network Fee will begin to sink in with merchants when they receive their next monthly statements, and most will not greet the new levy warmly, observers say.
“Merchants are struggling to cut corners, and here we are with another fee,” laments Ray Kenney, director of ISO partnerships at Cherry Hill, N.J.-based 1stPayGateway.Net.
The fee, which took affect April 1, may push merchants to the “tipping point” of deciding to stop accepting Visa cards and seek other means of payment, predicts Rod Katzfey, chief operating officer of Payleap LLC, a Warsaw, Ind.-based payments gateway. His company is giving customers the option to refuse Visa cards.
Most retailers seem likely to continue accepting Visa but may switch merchant-service providers, warns Adil Moussa, an analyst with the Boston-based Aite Group LLC.
“Anytime there’s a new fee, it disrupts the market a little bit,” Moussa says. “You see attrition.”
Visa admitted in an email message to ISO&Agent Weekly that the new fee comes as part of a response to the Durbin amendment to the Dodd-Frank law. The amendment, which took effect Oct. 1, essentially halved the average interchange fee on debit card transactions, limiting it to 21 cents, plus a few extra pennies to cover security costs. The previous average was about 44 cents per transaction.
The card brand’s attempt to compensate for that loss of revenue could have an unintended consequence, Katzfey speculates. The new fee cold rankle legislators and regulators, prompting them to begin regulating credit card interchange fees sooner than they might otherwise have done, he says.
To make matters worse, the new fee follows other recently imposed levies.
Already, many in the acquiring industry are charging merchants for failing to comply with the Payment Card Industry data security standards. Opinion varies on whether PCI fees represent reverse incentives or just another profit center.
Controversy also surrounds fees allegedly tied to an Internal Revenue Service mandate for acquirers to report merchants’ electronic transactions. The IRS plans to use the data to ferret out tax evaders.
(An expanded version of this article is scheduled for the May-June print issue of ISO&Agent and on ISOandAgent.com.)
