Ken Musante's article "Card network non-interchange pass-through fees," published Oct. 9, 2023, in issue 23:10:01, garnered attention from readers concerned about these fees. Following is a Q&A that continues to explore the issues Ken brought up in the article:
Ken,
You wrote a great article in The Green Sheet on NIPTF fees. I like the fact that your article goes beyond information to give the reader insight into what is causing the fees to increase and the fact that they often go unnoticed and unaddressed. The one thing I was left asking though is: How does the merchant use tools to minimize these fees? What is correct “authorization hygiene,” to use your term? Could there be a follow-up article there? Thanks.
Mark Dunn, Field Guide Enterprises LLC
Thank you, Mark, for the kind words and encouragement. While I may indeed write a follow up, the immediate answer to your question is to evaluate the NIPTF percentage and look for instances where it's beyond the high teens in basis points. There may be a reason for it to be high, such as if the merchant has a lot of foreign transactions, but look at the underlying and individual NIPTF categories. If you see substantial fees from the following categories -Misuse of Auth, Zero Floor Limit or Decline Transaction Resubmission Fee— the merchant has issues with authorization fidelity.
I shared in the article that these fees are "sinister." There is no publicly available schedule. There are over 100 different categories, and they are growing as a percentage of the merchant's discount. Being aware of them, the cost drivers and how to minimize will be more important for sales professionals and platforms going forward.
Unfortunately, the answer to your question is: It's difficult, and analysis is needed to identify and mitigate the issue.
Ken Musante, Napa Payments and Consulting
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