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How to Read a Merchant Processing Statement

You might be asking yourself, what even is a merchant processing statement? Well, basically a merchant processing statement is a report that provides a monthly summary of information about your sales, charges against your sales, monthly fees, and a list of that month’s transactions. As a payment processing company, these are vital to us and we receive them every month. At first glance there’s a ton of information on these, and not all of it is immediately recognizable. So, let’s talk about how to read these statements.

Don’t just read your merchant processing statement, understand it! Know where your money is going and if your business has processing fees. There are 4 key things to know when understanding a merchant processing statement:

  1. How much am I paying in base cost?
  2. How much am I paying in markups?
  3. Can I lower base costs?
  4. Is my markup competitive?

Step 1

Separate your base cost and wholesale from markups.

A base cost is the interchange fees and assessments combined. Wholesale pricing is the sum of interchange fees and assessments.

A markup is any charge above the total of base cost. It is the only negotiable area of processing expense and can also be a pain when reading a statement.

Step 2

Identify the pricing model that the processor uses to access fees.

Tiered/Bundled pricing is identified in a couple of ways, and is also your most common form of pricing. In order to find tiered pricing, think of these 3 key terms: qualified, mid-qualified, and non-qualified. These are also repeated through different credit card brands (Visa, MasterCard, American Express, Discover, etc).

Step 3

Identify the discount method.

Credit card processors charge fees using daily or monthly discounts. The discount method affects how total fees are calculated on a statement. With daily discount, a processor charges its qualified rate before the settlement and charges credit card transaction fees, non-qualified rated, and other miscellaneous charges end of month. With monthly discount a processor charges all fees in one at the end of every month.

Follow these three steps and in no time you’ll be a pro at reading a merchant processing statement. If not, at least you know who to call when you needed it explained again :)