What is a NABU or APF fee?

Every industry has its share of acronyms. But in 2009, the credit card processing industry was hit with two unwelcome additions to their alphabet soup of abbreviations. On April 18, 2009, MasterCard implemented a new fee, the Network Access and Brand Usage fee (NABU). And following right on the heels of the MasterCard announcement, on July 1, 2009 Visa implemented their U.S. Acquirer Processing Fee (APF). In order to understand what is a NABU or APF fee, you should know that these fees have gone through some revisions since they were originally introduced. Let’s take a look at their timelines:

MasterCard’s Network Access and Brand Usage fee (NABU)

2009:

• When this fee was originally implemented, it applied only to credit card transactions using a MasterCard issued from a US-based bank at a US merchant’s place of business (card-present and/or card-not-present transactions) that settled through the MasterCard network. This included refunded credit card transactions and signature debit card transactions. This fee was not charged until the transaction actually settled, which means the fee did not apply to authorization transactions.
• Cost: $0.0185 per settled transaction

2012:

• When answering what is a NABU or APF fee, you should be aware that on January 8, 2012, MasterCard announced that their NABU fee will apply to all transactions whether or not they have been settled. Now authorization transactions are also subject to this fee.

2013:

• Effective June 30, 2013, the NABU fee was increased to $0.0195.

VISA’s Acquirer Processing Fee (APF)

2009:

• When this fee was originally implemented, it applied to all US based VISA authorizations process in the United States with no restriction on where the issuing bank and/or the cardholder is located. This fee is charged whether or not the transaction actually settles.
• Cost: $0.0195 per authorization transaction

2012:

• On July 23, 2012, VISA implemented a separate APF for credit and debit card authorization transactions.
• Cost for credit card authorization transactions: $0.0195
• Cost for debit card authorization transactions: $0.0155

So What Will These New Fees Actually Cost Me?

Now here’s where things get interesting. When it comes to what is a NABU or APF fee, on a large purchase, these new fees really amount to a very small percentage of your sale. For example, if you own an electronics store and you process a $100.00 sale with a MasterCard credit card, the NABU fee will be 1.95 cents on that sale. Doesn’t seem like enough money to make a big fuss over, does it? But remember, these fees are charged on a per-transaction basis. Every time a customer pays his bill with a MasterCard or Visa, you pay that same NABU fee for each transaction. So say you own a coffee shop where you do a brisk daily business. Now multiply that per transaction fee by a hundred transactions a day, 700 transactions a week, 2800 transactions a month, 33,600 transactions a year… well you get the picture.

There was plenty of negative publicity surrounding the NABU and APF fees when they were first implemented, since this money is in addition to the interchange fees you’re are already being assessed by the issuer’s bank and the card brand network for the part they play in processing your credit card transactions. These fees are the same across the board for all merchants, and they will appear on your monthly credit card processing statement, usually as a separate line item. You may see them listed as NABU, APF, Network Access Fee, or VS APF-CR indicating the charge was made with a Visa credit card, or VS APF-DB for a Visa debit card.

With all the negative publicity of what is a NABU or APF fee, most credit card processors pass this fee along at cost to their merchants. Still it’s money coming off your bottom line, and to protect yourself it’s important to check your credit card processing statement every month to be sure these fees are not being marked up. And it’s just as important to research periodically to learn if there have been any changes in these fees. In the event there has been a decrease in these fees, you want to be sure your processor is passing along the savings. It’s your money… look after it!