By Karen October 8, 2025
In today’s digital-first economy, ecommerce and subscription/SaaS businesses have become some of the fastest-growing sectors. Unlike traditional retail models, these businesses rely heavily on online transactions where the cardholder is not physically present. While card-not-present (CNP) payments create convenience for customers, they also carry unique risks and higher costs for merchants. One of the lesser-known but significant expenses is the Fixed Acquirer Network Fee (FANF), a monthly assessment charged by card networks like Visa. For subscription and ecommerce merchants, understanding how CNP profiles and FANF tiers work is crucial to managing costs and ensuring long-term profitability.
FANF is not a negotiable fee—it is set by the card networks and passed down by payment processors. What many merchants in ecommerce and SaaS discover too late is that their business model places them into specific tiers that directly influence how much they pay each month. These costs are not always explained clearly during onboarding with a processor, which can lead to confusion when fees show up on statements. By learning what drives FANF, how CNP profiles affect risk categories, and what businesses can do to manage their tier, merchants can take a proactive role in reducing surprises and planning smarter.
Understanding Card-Not-Present Transactions
Card-not-present transactions refer to payments where the cardholder does not physically present their card at the point of sale. This includes online payments, recurring subscription charges, and transactions made over the phone. For ecommerce and SaaS businesses, nearly all transactions fall into this category. While convenient for customers, CNP transactions carry greater fraud risk because the merchant cannot verify the card physically or require a PIN. As a result, payment networks impose stricter rules and often higher costs to offset this added risk.
For subscription models, recurring billing adds another layer of complexity. Customers provide their card once, and the merchant charges it at regular intervals. This creates opportunities for declined payments due to expired cards, insufficient funds, or disputes. Because of these risks, CNP merchants are placed in different fee structures compared to card-present businesses. Understanding this distinction is the foundation for seeing how FANF is applied and why subscription and ecommerce companies often face higher fees than traditional retailers.
What is the Fixed Acquirer Network Fee (FANF)?
The Fixed Acquirer Network Fee is a monthly fee charged by Visa and passed down through acquirers and processors to merchants. FANF is designed to cover the operational costs of maintaining the Visa network and is applied differently depending on the type of business and how it processes transactions. For brick-and-mortar merchants, FANF is based on the number of physical locations. For ecommerce and subscription businesses, it is tied to the volume of card-not-present transactions.
In practical terms, FANF can range from a few dollars to hundreds or even thousands per month for high-volume online businesses. For example, a small SaaS company processing under a certain threshold may fall into a lower tier, while a large ecommerce merchant with significant monthly card volume may see FANF costs scale dramatically. The challenge for businesses is that FANF is not negotiable with processors, but understanding what moves a merchant into one tier versus another can help them predict costs and plan around them.
How FANF Applies to Ecommerce and SaaS Businesses
Unlike traditional retailers with a physical footprint, ecommerce and subscription businesses are treated differently under FANF rules. Because nearly all transactions are card-not-present, these businesses fall under the “CNP merchant” category. FANF tiers for CNP merchants are based on monthly processing volume, with higher transaction volumes pushing businesses into higher fee categories. This means that as ecommerce and SaaS businesses grow, FANF expenses scale alongside them, becoming a more significant portion of overall processing costs.
For subscription businesses in particular, the recurring nature of billing means a steady stream of transactions every month. Even if individual payments are small, the total volume may push the business into higher FANF brackets. For example, a streaming service charging $10 per month with tens of thousands of subscribers will generate enough transaction volume to fall into a much higher tier than a boutique ecommerce store processing fewer but larger orders. Understanding how these categories apply ensures businesses are not caught off guard when FANF increases as their growth accelerates.
Factors That Influence Your FANF Tier
Several factors determine where a business falls within FANF tiers. The most significant is card-not-present transaction volume, which directly ties into monthly revenue for ecommerce and SaaS companies. The higher the number of transactions, the higher the fee tier. For subscription businesses, this can be particularly impactful because each monthly billing cycle generates new transactions even from the same customer.
Other influences include the type of merchant category code (MCC) assigned to the business and how payment processors classify the transactions. Some industries may be seen as higher risk, further reinforcing the placement in more expensive fee structures. Additionally, FANF differs between card-present and card-not-present businesses, meaning that hybrid merchants with both in-person and online operations must pay attention to how much of their sales come from each channel. Ultimately, volume and transaction type remain the biggest drivers of tier movement.
Strategies for Managing FANF Costs
While FANF itself is non-negotiable, businesses do have strategies for managing its impact. One approach is to minimize unnecessary transactions. For subscription businesses, this might mean encouraging customers to pay annually instead of monthly, reducing the total number of recurring charges processed each year. Fewer transactions can sometimes mean lower FANF tiers, depending on thresholds.
Merchants can also explore ways to improve transaction approval rates and reduce declines, which add unnecessary volume without generating revenue. Updating card details proactively, offering multiple payment methods, and using account updater services can help reduce failed attempts. For hybrid merchants, balancing card-present and card-not-present sales may also impact FANF charges, though ecommerce and SaaS companies often have less flexibility in this area. Ultimately, managing FANF is about efficiency—processing fewer, higher-value transactions when possible and keeping recurring billing as streamlined as possible.
The Role of Processors and Transparency
One of the challenges with FANF is that many merchants are not aware of it until they see it on their monthly statements. Payment processors are responsible for passing along this Visa fee, but not all providers explain it clearly during onboarding. This lack of transparency can create confusion and frustration for ecommerce and SaaS businesses that suddenly face higher costs than expected. Merchants in these industries should proactively ask their processors about FANF during contract discussions and request detailed breakdowns of how fees are calculated.
Choosing a processor that offers clear, itemized statements and educational resources can make a significant difference. Some providers specialize in working with ecommerce and subscription businesses and may offer tools to help minimize other costs associated with online payments, such as chargebacks and fraud prevention. While FANF itself cannot be waived, working with a transparent processor helps merchants prepare for and budget around it effectively.
How Growth Impacts FANF Over Time
Growth is the goal of every ecommerce and SaaS business, but it comes with the reality of scaling costs. As transaction volume increases, so too does the FANF tier. For a new business just starting, fees may be manageable, but as the subscriber base or order volume grows, FANF can become a much larger expense. This makes it important for businesses to plan ahead and factor FANF into their long-term financial models.
Subscription businesses often feel this impact most because growth is cumulative. Adding thousands of new subscribers each month means transaction volume multiplies quickly, pushing the business into higher brackets. Ecommerce businesses may see more seasonal fluctuations, but growth over time has the same effect. Merchants who understand these dynamics can prepare by forecasting FANF costs as part of their expansion plans, ensuring there are no surprises as their business scales.
Balancing FANF with Other Processing Fees
While FANF is important, it is only one piece of the overall cost of accepting card payments. Ecommerce and SaaS merchants also pay interchange fees, processor markups, chargeback fees, and gateway costs. In many cases, FANF may represent a relatively small portion of total expenses, but because it scales with volume, it cannot be ignored. Balancing FANF with other costs requires a holistic view of payment processing.
Merchants should evaluate whether their processor offers competitive rates in other areas that offset the non-negotiable FANF. For example, negotiating lower interchange-plus markups or reducing gateway fees may save more money overall. Some businesses also invest in fraud prevention tools to reduce chargebacks, which indirectly saves money by lowering risk profiles. By considering FANF as part of the bigger picture rather than in isolation, ecommerce and SaaS merchants can manage overall costs more effectively.
The Connection Between Fraud Risk and FANF Tiers
Fraud risk plays a central role in how payment networks structure fees, and card-not-present merchants are often placed in higher categories because of it. Unlike card-present transactions where a chip or PIN adds layers of protection, ecommerce and subscription models rely on digital authentication that can be bypassed by stolen card numbers or identity fraud. Visa and other networks apply FANF partly as a way of managing these systemic risks across their ecosystem. For SaaS and ecommerce businesses in New Castle or anywhere else, this means that even legitimate merchants pay more simply because the overall category is riskier.
Businesses can reduce exposure to fraud by adopting secure checkout processes, using tools like 3D Secure authentication, and monitoring for unusual purchasing patterns. While these efforts may not lower FANF directly, they strengthen a merchant’s risk profile with processors and can improve approval rates and reduce chargeback costs. The takeaway is that FANF is linked not just to transaction volume but also to the nature of digital commerce, where fraud risk is higher by default. Understanding this connection helps businesses make sense of why they are placed in particular fee structures and motivates them to strengthen security practices.
How Recurring Billing Shapes CNP Profiles
Subscription and SaaS businesses operate on recurring billing models, which means customers are charged at set intervals without needing to re-enter their payment details. While this ensures convenience and steady revenue, it also increases the frequency of transactions and the potential for declines. An expired card, insufficient funds, or customer disputes can all trigger additional transaction attempts that add to overall volume. From a FANF perspective, these repeated charges and retries contribute to moving businesses into higher tiers over time.
Merchants can mitigate some of these challenges by offering alternative payment methods such as ACH debits, PayPal, or digital wallets, which spread transaction volume across different channels. They can also use account updater services that automatically refresh expired card details, reducing the risk of failed transactions. By streamlining recurring billing and minimizing unnecessary retries, businesses may not escape higher FANF tiers entirely, but they can keep growth from generating excess volume that does not translate into revenue. For subscription companies, mastering recurring billing efficiency is critical to both customer retention and payment cost management.
Preparing Financial Models for FANF Costs
One of the most overlooked aspects of FANF is its long-term financial impact as businesses grow. Many ecommerce startups focus heavily on acquiring customers and building revenue but underestimate the scaling costs of payment processing. Since FANF increases alongside transaction volume, it should be built into financial models from the beginning. Ignoring it can lead to unexpected margin pressure as subscriber bases expand or as sales climb during peak seasons.
For SaaS businesses, projecting FANF should be part of forecasting subscription growth. A company with 1,000 customers paying monthly might face manageable fees, but scaling to 50,000 subscribers could move it into the highest FANF tiers, creating a substantial recurring expense. Similarly, ecommerce businesses experiencing rapid holiday sales growth must anticipate how surging volume affects costs. By incorporating FANF into financial planning, businesses can set accurate pricing, maintain profitability, and avoid being blindsided by fee increases. Treating FANF as a predictable fixed cost ensures it becomes part of the business model rather than a disruptive surprise.
The Future of FANF and Digital Commerce
As digital commerce continues to dominate, questions remain about how fees like FANF will evolve. Card networks introduced FANF to ensure that infrastructure costs were fairly distributed across merchants, but as technology advances and fraud prevention tools improve, the justification for higher CNP fees may shift. In the future, businesses could see FANF structures adjusted to reflect new authentication standards, alternative payment adoption, or even regulatory pressures aimed at making ecommerce more affordable for merchants.
For subscription and SaaS companies, the trend toward open banking, real-time payments, and blockchain-based solutions may also provide alternatives that bypass traditional card networks. These innovations could eventually reduce reliance on FANF-heavy payment methods. However, until such shifts become mainstream, ecommerce and SaaS merchants must operate within the current framework and adapt accordingly. The key is to stay informed, monitor industry changes, and remain agile. The future of FANF may bring more flexibility, but in the meantime, merchants must manage today’s costs while preparing for tomorrow’s possibilities.
Conclusion
For ecommerce and subscription/SaaS businesses, card-not-present transactions are both an opportunity and a challenge. They enable scalable business models and recurring revenue but also bring higher risks and costs. The Fixed Acquirer Network Fee is one of those unavoidable costs that merchants must understand. While FANF cannot be negotiated away, its impact can be predicted, managed, and incorporated into long-term planning.
By learning how card-not-present profiles affect their risk category, understanding what drives FANF tiers, and preparing for how growth impacts costs, businesses can stay ahead of the curve. Strategies like reducing unnecessary transactions, choosing transparent processors, and balancing overall processing expenses give merchants more control. For ecommerce and SaaS companies in 2025, knowledge of FANF and CNP dynamics is not just about managing fees—it is about building sustainable business models that account for every element of payment processing.