Network Fee Increases – What’s Happened in April?

25th April 2018
Alistair Matthewson
Alistair Matthewson

Every April and October, the networks allow themselves to announce new or amended fees which greatly impact the merchant community.

Network fee changes by Visa and Mastercard have been a long-time frustration of the merchant community due to the complexity they bring and their upward trend. Twice a year, merchants wait with baited breath to see which industry will be the hardest hit, and this year has been no exception.

There are three main changes to network fees from April 2018 which merchants operating in the U.S. need to be aware of. We’ve broken these down below:

Fee Changes

  • Changes to Visa’s Fixed Acquirer Network Fee program (FANF) – This controversial fee which was first introduced in 2012 is paid monthly, but is not directly transactional. It will be increasing by as much as 87% for some “High Volume” merchants such as Quick Service Restaurants and Gas Stations. Visa’s FANF can represent as much as 0.15% of gross sales for some merchants.
  • Changes to Mastercard’s Fee Program – As we’ve seen at CMSPI over the years, when one network increases fees the other is quick to follow. Mastercard has followed suit and announced changes to the Acquirer Brand Volume Fee for all card transactions. The fee has increased from 0.12% to 0.13% and could pose a significant increase to merchants processing large numbers of transactions that qualify for this increased fee. Based on 2017 US card usage and growth forecasts, this stands to add $145million collectively to US merchants’ card fees over the next 12 months.1

Rule Changes

  • Extension of Visa’s Transaction Integrity Fee (TIF) – Visa’s TIF, a fee introduced in April 2012, will now be extended to include U.S. domestic, and some inter-regional, Visa credit card transactions that do not qualify for the Custom Payment Service program. This $0.10 fee per transaction is in additional to the interchange fee, and will pose a significant increase for some merchants.
  • Shortening of Visa’s “Misuse of Authorization” fee window previously up to 20 days, merchants with legitimate need to hold funds such as rentals and Hotel chains will now have only a 10 day window in which to settle a transaction before incurring an additional charge. Unfortunately for some merchants, the alternatives – electronically reversing the authorization, or using a “Zero-dollar Auth” check, are not practical when compared with their risk exposure.
1Calculation based on 2017 annual report US GDV growth of 5%; p44;
And Supplementary Performance material Q42017 reporting US GDV of $1,385bn processed;


Overall, the message to merchants is consistent to earlier fee increases. Be aware of the changes in the market, make sure you’re communicating regularly with your vendors, and regularly review your invoices to ensure any changes are passed on correctly. At CMSPI, we continue to help our clients review their arrangements and mitigate these increases, regularly saving six and seven-figure amounts for the merchant community.

Want to discuss scheme fee increases?