The unexplained “ISA (International Service Assessment Fee) fee” item that appears on your monthly statement of account may be something you’re dealing with as an online retailer who is using payment processors like Tailored Pay. If you are keen to know how you incurred an ISA fee and why you are seeing such a charge on your merchant statement of account, you should keep on reading below to be able to understand the nature of an ISA fee and why it appears on your account statement.
ISA Fee – Defined
When clients pay using credit or debit cards issued by banks located outside of the United States, retailers are subject to a processing fee levied by Visa known as the International Service Assessment (ISA) fee. This fee applies to both traditional businesses and online retailers operating through their websites, moreover, clients are still responsible for paying ISA fees even if their issuing banks are headquartered in a country other than the United States but have branches in the country. Other card companies, such as MasterCard, Discover, and American Express, in addition to Visa, all impose comparable fees for overseas transactions under a variety of different names. In addition to the International Service Assessment (ISA) tax, online retailers may also be subject to the International Acquirer Fee (IAF) levied by Visa on their monthly bills.
How is ISA Different from IAF fees?
When it comes to card issuers, the distinction between the two is mostly one of semantics, which means there isn’t much of a practical difference between the two. Although the IAF and the ISA are both based on the same idea, Visa bills them as two independent fees that are added on top of one another. That being said, if you receive a bill for an ISA fee, you should be aware that an IAF charge is also associated with it. If you mix such expenses along with the possibility of a fee for exchanging currencies, you might be looking at extra costs equal to up to 1.65 percentage points of the transaction fee.
Who Should Pay for the ISA Fees?
The merchant is, however, why is this the case? Several business owners are dissatisfied with the prospect of being responsible for extra fees associated with foreign payment processing. Fairness dictates that customers should bear the additional expenses associated with processing their payments.
Visa is unable to bill cardholders directly for the increased fees, so they instead bill merchant processors. Consequently, merchant processors must pass on the expenses to merchants. Hence, ISA fees are included in your monthly processing bill.
How Many Times Are ISA Fees Charged?
A consumer incurs ISA costs when making a payment with a card provided by a non-U.S. bank. Visa will charge you every time you accept a purchase from a foreign card, regardless of online or in a shop, so long as you are an eCommerce merchant. Consider, for example, a visitor from Australia who possesses a travel card issued in his own country. When he uses his card to pay you, you will be billed with the ISA fee. Or, if you operate an online business and Brazilian consumer orders a product using his country’s credit card for delivery in the United States, you will incur an ISA cost. It’s straightforward: you incur fees whenever you receive payment from a foreign card.
Where are ISA Fees Located in the Monthly Statement of Account?
The ISA charge may appear on your merchant account’s statement for card processing. It only appears on your bill in the month when you accepted a foreign card payment. And how the ISA charge appears on your bill is dependent on your pricing plan.
If you are on a flat-rate pricing structure, you will likely not see a breakdown of your ISA costs. Instead, ISA costs will be included in your fixed rate. Therefore, prices labeled as “other fees” or “miscellaneous fees” may include ISA fees. If you ever see a high cost, you should contact your merchant processor for clarification.
If you are using a tiered pricing model, however, every transaction is probably broken down with costs for each item. You should thus notice “ISA fee” or anything similar on your statement of account.
How Much Does the ISA Fee Cost on the Average?
As indicated above, the costs (and labels) of ISA fees differ amongst card-issuing businesses, and below are some of the most common fees that eCommerce retailers may encounter:
#1 – Visa. Visa levies two fees for each foreign card transaction to merchants:
- International Service Assessment (ISA) fee: Costs around 0.80% for transactions occurring overseas that have no currency exchange, and 1.20% for transactions that have currency interchange.
- International Acquirer Fee (IAF): 0.45%.
The sum of the results is 1.25 percent for non-interchange transactions and 1.65 percent for interchange transactions for businesses.
#2 – MasterCard. MasterCard imposes two additional fees on overseas transactions:
- International cross-border fee: This is similar to the VISA ISA Fee and this costs 0.40%
- Acquired Program Support (APS) – 0.55%
Furthermore, aside from the APS cost, if a client will pay in US dollars with a MasterCard that was issued by a non-US bank, a cross-border fee will be charged as well.
#3 – Discover. Additionally, this card issuer is also charging two fees for overseas transactions:
- International Processing fee: This applies in the same way as the ISA fee and the rate is at 0.55%
- International Service fee – 0.80%
Discover incorporates both fees as well, so, your business will incur a 1.35 percent fee on all overseas transactions.
#4 – America Express. As a general rule, American Express charges at least 0.40 percent for overseas transactions. Contacting them or your merchant service provider is the best way to learn the specific AmEx costs listed on your monthly account.
How to Decrease ISA Charges
As ISA fees are assessed for the processing of overseas transactions, the most obvious solution to cut ISA costs is to cease accepting international payments. Considering the possible decline in sales, this does not seem like a wise plan, so you can try to modify the pricing scheme of your merchant into interchange-plus as this will break down every activity and will only cost you the “minimum rate” for every transaction.
You might also explore building a branch in a country with a large consumer base. Or, you may offset the impact of these fees with a 1 to 2 percent price rise, depending on the receptivity of your customers.
