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Effective April 1st, 2012, Visa began charging all merchant accounts that accept Visa with something called the Fixed Acquirer Network Fee , or FANF . This fee was created as a way for Visa to recoup some of its profits that were lost when the Durbin Amendment became effective on October 1st, 2011.

The Durbin Amendment was proposed to congress by Illinois Senator Dick Durbin in order to allow independent business owners to process credit cards at a lower interchange rate. Before October 1st, 2011, a business had to process a high volume of credit card transactions in order to qualify for something called " corporate points ."

The corporate point system allows corporations like McDonald's, Wal-Mart, Starbucks and Home Depot, just to name a few, to process credit cards anywhere between.01% and.5%. Corporation merchant accounts are set up with a direct processor, which allows them to receive such low rates.

Before October 1st, 2011, independent business owners had no such opportunity. They had to purchase the ability to process credit cards through a third party like a local bank. Because the third party isn't licensed to process credit cards, they buy this service from a direct processor and charge an overhead to the independent business owner in order to turn a profit. The merchant was then set up on something called the tiered-pricing system , meaning a business is charged anywhere from 1.5% – 3.5% depending on the card type (rewards card, frequent flyer card, etc.).

This drastic difference in rates became the center point of Sen. Durbin's Amendment. He believed that in order for independent businesses to compete effectively, they had the right to receive a.5% interchange rate from processors, regardless of card type. Congress agreed and the Durbin Amendment became effective on October 1st, 2011. This amendment gives all business owners the ability to process credit cards with a direct processor as opposed to a third party. No longer do business owners have to pay the marked-up rates created by the tiered-pricing model.

However, a key element to the Durbin Amendment is that merchant service companies are not required to pass along the reduced fees. For example, if your account is set up through a bank, they won't be able to give you an interchange rate of.5% because they would lose all of their profit margin. The law expresses that it is the responsibility of the business owner to set up their account correctly in order to receive the savings.

By Harrison Reid

Paying Too Much in Credit Card Processing Fees?

Paying Too Much in Credit Card Processing Fees?