At the end of last year Hungarian cartoonist Gergely Dudas, who goes by the pen name of Dudolf, created a Where’s Waldo-style cartoon where you had to find the panda hidden amongst a bunch of snowmen. While some people found the panda in a matter of seconds, it left others stumped.

After all, it should be simple, right? Pandas don’t look anything like snowmen. However, in this cartoon it’s just rows and rows of heads. My guess is that there are over 100 snowmen heads looking this way and that way, but it’s mainly just heads, with a few hats and scarves thrown in for good measure. And in one of those rows there is a cartoon head of a panda.

With hundreds of thousands of likes and shares on Facebook, it’s obvious that what seems to be a simple test can be very hard. Many of my friends were unable to find the panda. If you stare at the picture you can see why it’s so difficult. The heads are all the same size, and the picture isn’t that big. As you look at the picture, ultimately all you see are carrot noses.

Maybe it’s my vast experience looking for padded credit card fees on merchant statements, or just how my brain is wired, but the carrot noses were the key to me being able to find the panda. I stopped looking at the picture, and started looking at the noses. Very quickly, the panda became evident.

Today, merchant statements are quickly becoming like the panda picture. But instead of finding the panda the Independent Sales Agent is constantly challenged to find padded credit card fees. And like the panda picture, if you don’t simplify the process you can easily find yourself lost in the data. That’s why you should focus on the symbolic ”carrot noses” first. To do that you must educate yourself on basic interchange costs with a concentration in the four most common types of pass through fees: APF/NABU, assessments, kilobyte, and the Processor/Acquirer Fee. The key is to identify the actual cost for each of these items.


These two fees are transactional costs assessed on each transaction. APF (Acquirer Processing Fee) is a Visa expense while NABU (Network Access and Brand Usage) is a MasterCard fee. APF has two separate fees, one for signature debit and the other for credit, whereas the NABU fee is the same charge for both.

It’s not uncommon to see a markup on these fees ranging from as little as a half a cent to as much as 4 to 5 cents over the cost.


All of the payment networks have an assessment expense. Even though they may have different names, they are all in the form of basis points.

Because you’re dealing with basis points it’s easy for a merchant to perceive it as pass through, and not even notice if there are padded credit card fees. However, there are many companies who are adding upwards of 9 basis points to the cost of these fees. That can translate into almost 7 cents an item on a $75 ticket.

Kilobyte Fee

Visa charges a very small kilobyte fee of about a quarter of a penny. Some providers pass it through while others just absorb the cost.

However, there are some who use this fee to charge an added transactional cost, or even add basis points, which significantly increases the costs to the merchant.

Processor/Acquirer Fee

With the advent of American Express OptBlue, the ability to directly settle American Express has been a significant benefit to merchants.

Some processors are adding this fee as an expense. It can range from 15 to 75 basis points on American Express volume. Most merchants don’t notice because their American Express costs are still less, but it’s not a pass through expense.

Sure, almost any fee can be artificially increased, but these are the most common ones you will see today when reviewing merchant statements. There may be others, but these are like the panda amongst the snowmen. If you just stare at the picture, they look like snowmen. However, if you focus on the carrot noses – or the true costs – they will stand out.

Some of you are probably wondering why I’m bringing up padded credit card fees because this is certainly not a new practice. Well, it’s important because most payment processors don’t share the revenue found in these markups with their ISO partners. It may be worthwhile for you to look at your merchants’ statements to see if there are any hidden pandas that you weren’t aware of. This review might just prove to be very telling of your partner’s business practices.

Article by Clearent by Xplor

First published: March 01 2016

Last updated: April 10 2024