When you properly verify information, the zero dollar verification fee will apply and the misuse of authorization fee will not.
Visa Assessments
When you accept Visa cards at your business, Visa imposes small charges called assessments. You pay assessments through your credit card processor. These fees are often pennies or less. Visa is in charge of setting the cost for assessments, which your processor can pass to you at cost. However, it’s important to note that your processor isn't required to pass assessments at cost. In fact, Mercury Payments was sued for padding assessments without disclosing it. CardFellow clients needn’t worry. Our legal agreement with processors requires that they pass assessments to you at cost. Additionally, we monitor processor charges as part of our statement audit service. If you haven’t had an audit recently, log in to your CardFellow account for assistance.The Zero Dollar Verification Fee
As of 2022, Visa sets the Zero Dollar Verification Fee at $0.025. When you verify cardholder information without charging a card, this fee will apply. This fee is preferable to the Misuse of Authorization Fee, which you would be charged if you verified the cardholder’s data by authorizing a small charge on the card. The Misuse of Authorization Fee is higher than the Zero Dollar Verification Fee, as it serves more as a penalty fee for not properly verifying data through a zero dollar verification process.Information You Can Verify
There are several pieces of information you may wish to verify when a customer uses a credit card at your business. The two most common are address verification and card verification value (CVV). Address verification allows you to confirm that the address the customer supplies is the same one on file with the credit card company. CVV or CVV2 refers to requiring the 3-digit code on the back of a card (or 4-digit code on an Amex card) at the time of purchase. CVV/CVV2 is common in online transactions to help prove that the card is physically with the purchaser. It’s also common for “keyed” transactions such as phone orders and purchases made through a virtual terminal.Locating the Fee on Statements
Since your processor only charges you the Zero Dollar Verification Fee if you verify information without charging a card, you may not see the fee on every monthly processing statement. Additionally, you won’t see the fee on any statements (regardless if you were charged it or not) if you’re on a “flat rate” pricing model. If you process through aggregators such as PayPal, Square, or Stripe, you’re on flat rate pricing. If you’re not on flat rate processing and you’ve verified cardholder details without authorizing a charge, you should see the fee listed as a line item under your Visa charges. Keep in mind that different processors may refer to the fee by different names. You’ll need to look for the full name or any variations. In the example statement below, the processor refers to the fee as the "Visa Zero AMT & AVS fee." While it lumps the two together, it lists the Visa-set Zero Dollar Verification Fee amount of $0.025.
This processor also includes the number of transactions to which the fee applied, making it easy to check the math. CardFellow clients don't have to worry about checking assessments. As part of our free statement audit service, we check your interchange and assessments for you.
Lowering Costs to Take Credit Cards
Many businesses wonder about lowering their costs to take credit cards. In many cases, you can lower costs. However, assessments typically aren’t the place you’ll want to focus your energy, as the fees are typically too low to make much difference. An exception is if you currently run a lot of transactions for small dollar amounts to verify data and incur regular misuse of authorization fees. Since the misuse fee is higher than the zero dollar verification fee, you’ll want to consider changing your process. However, even in that situation, the difference between the two fees is small. In the example statement above, the business incurred the Zero Dollar Verification Fee for 70 transactions. At $0.025, that came out to $1.75. If the business had run small dollar amounts to verify data instead, they would have incurred the Misuse of Authorization Fee. That would be a 9 cent charge for each of those 70 transactions, for a total of $6.30. That's only a $4.55 savings. Even if you eliminate all instances of the Misuse of Authorization Fee, you’re not likely to see significant savings. Instead, you’ll want to work on securing the lowest markup over cost. You can think of assessments (along with interchange fees) as the wholesale cost of credit card processing. As with anything, your goal is to pay as close to wholesale as possible. That means securing the lowest processor markup. If you’re new to interchange, assessments, and markup, be sure to read our complete guide to credit card processing.Comparing Markups
Since wholesale cost will be the same no matter which processor you use, all you really need to compare is markup from one processor to another. We’ve made that easy by creating a powerful price comparison tool. It’s free to use and there’s no obligation. When you create your free CardFellow account, you’ll get quotes instantly from processors in our marketplace, but you can also request quotes from any processor to more easily compare markups in an apples-to-apples format. Give it a try! Sign up today.
Ben Dwyer
Ben Dwyer began his career in the processing industry in 2003 on the sales floor for a Connecticut‐based processor. As he learned more about the inner‐workings of the industry, rampant unethical practices, and lack of assistance available to businesses, he cut ties with his employer and started a blog where he could post accurate information about credit card processing. As the blog gained in popularity, Ben began directly assisting merchants in their search for a processor. Ben believes in empowering businesses by providing access to fair, competitive pricing, accurate information, and continued support. His dedication to transparency and education has made CardFellow a staunch small business advocate in the credit card processing industry.
