Sometimes when you open your processing statement for the month, you will be surprised that it has gone up more than it used to. One of the culprits behind this is the international processing fees like the international service assessment (ISA). This prompts some business owners to ask: what is an ISA fee? This article will go over the details of an ISA fee.
What is An ISA Fee?
The ISA fee that appears in your monthly statements is a type of international processing fee. Visa charges it, and merchants instead of the customers shoulder the cost. Other banks and payment processors have their versions of this fee as well.
For example, Mastercard and American Express have something called the International Cross Border fee, which is around 0.40% of the transaction. On the other hand, Discover has the International Processing Fee, which is about 0.55%. These fees are common practices for payment processors and the like. It’s not something unique to Visa, so switching to another won’t do you much good.
Note that the ISA fees are held separate from other interchange fees, just like other international processing fees. It usually represents an extra cost of around 2% to 3% of each transaction’s usual charges.
When Is It Charged?
Remember that the ISA fee has nothing to do with the purchases that your customers make. This is a fee that has more to do with the bank that you are associated with than the bank that issued your customer’s credit card.
Let’s say a customer walks into your store one day and buys something using his credit card. It would have been just another regular transaction except that the customer used a credit card issued by a bank based or registered in another country.
It doesn’t matter whether that bank has a branch here or not. As long as it is not based here or is registered in a different country, then the ISA fee applies. This scenario can happen, especially when you have tourists arriving and buying here. That is where international service fees, like ISA, get charged.
How Much is the ISA Fee?
ISA fees range anywhere from 0.80% to 1.2% of the transaction value. Some may think that it isn’t much, so why not just pay for it and forget, right? However, remember that this fee is charged per transaction, and it can stack up.
Apart from that, Visa also charges another fee other than the ISA for international transactions. You will also get billed for the International Acquirer Fee, which is around 0.45%.
Who Should Pay for These Fees?
The honest but unfortunate answer is that you, the merchant, will be responsible for paying for this fee. You will only know the details about it on your statement after the transactions with your clients have been completed.
Is There a Way Around It?
Again, unfortunately, there isn’t. This is how card member associations around the world have set things up. What happens is that this fee is originally charged to your processor. They will then pass on the cost to you.
There are three pricing setups that they can offer you to at least ease up on the burden:
- Interchange plus pricing: each transaction will be analyzed and billed individually.
- Tiered pricing: rates go up according to each tier.
- Flat rate pricing: simple charging system but becomes over-inflated. However, it is more convenient and is bundled with your plan.
That pretty much covers what is an ISA fee and the details surrounding it. Remember that this fee is non-negotiable.
The best way for you to handle it is to make sure that you are paying as little as possible to ISA. Work with a merchant service company that has a proven track record of helping merchants save sizable amounts from these international fees.