ISA Fee: What It Is and What You Can Do About It

An observation that most, if not all, business owners make is that the processing fees get higher as the months go by.

This should not be a surprise as an ISA fee is the culprit behind those extra charges. Studies have shown that 90% of businesses in the U.S. experience a rise in processing costs due to ISA fees. 

As new establishments emerge and get more customers, experts predict that the numbers will rise by the end of 2020.

Is it something to be worried about? Why is an ISA fee charged, and when is it imposed? Whether you have experienced it or not, it is vital to understand what it is and what it involves.

What is an ISA Fee?

Short for International Service Assessment fee, an ISA fee is a worldwide processing fee that VISA charges merchants.

Merchants receive the fee whenever their customer(s) use a debit or credit card that was provided by a bank that is not in the U.S.

How Much is the ISA Sum?

In April 2008, when VISA first started charging the ISA fee, it was 0.40% when there was no currency swap involved. If there was a currency exchange, the figure doubled to 0.80%. This was plus the standard interchange rate that applied to the transaction.

Seven years later, on April 15th, there was a rise in the ISA fee. The amount rose to 0.80% without a currency change and a whopping 1.20% with a currency change. Different businesses get varying final amounts.

The ISA fee goes hand in hand with the International Acquirer Fee, which is 0.45% and operates under similar circumstances with the ISA.

The IAF was first introduced in October 2009 and is in addition to the usual interchange rate as well as any other costs that may surface.

Who Clears the IAF?

The trader pays the International Acquirer Fee. It may seem fair that a client should handle their extra processing cost charges.

However, since VISA cannot bill you directly for the ISA cost, they send it to your processor instead.

The processor often passes the charge to you, and the figure will appear as an independent cost on your monthly account statement.

If you are on a flat-rate pricing plan like Square, it is likely that you will not view assessments broken down independently. Most processors bundle the amount into your plan. If you are not sure how your provider handles such fees, consult your contract documents.

If, on the other hand, you are on an interchange-plus payment model, your chances of seeing assessments as independent line items are higher. Depending on your processor, the lines may appear in the list form or be categorized by card brand.

The final pricing plan that is not recommended is the tiered pricing plan. Your processor may charge you a non-qualified transaction rate or pass the charge on at a cost. Should they opt for the former option, it is because they can make a little profit from the cost that they are directing your way.

Is it Possible to Reduce the Cost of the ISA Fee?

There are several ways- but they may prove to be a bit of a hassle. First of all, you can refuse to take international payments, which will affect your enterprise.

The next option is to switch to interchange switch-plus pricing if you are on the tiered or flat payment pricing models, which is doable depending on the type of processor you have.

You can also establish a particular branch in another country where you carry out plenty of business.

The ISA Fee Should Not Affect Your Business or Finances

The ISA fee is a cost that is not going anywhere anytime soon. From the growth in the tourism sector plus the increase in global/eCommerce transactions, it is evident that the only place this sum is going is higher.

Since it is non-negotiable, consider lowering expenses by paying as little as you can for credit card processing.