Read your merchant statement the way we do

A merchant statement is not written to be read. It is written to be skimmed down to the total and filed. The layout changes by processor, the fees go by a dozen different names, and the one number that would tell you the truth, your markup, is never printed. Read it in the right order, though, and it gives the whole game away in a few minutes.

How do you read a merchant statement?

To read a merchant statement, start with three figures and ignore the rest on the first pass. They are usually in a summary box near the top or on the last page.

• Total volume, sometimes called sales or amount submitted. This is the dollars you ran in cards for the period.
• Total fees, sometimes split into discount, fees, and adjustments. Add every piece together. This is everything they charged you.
• Transaction count, the number of card sales. You will need it to test a per-transaction price.

Divide total fees by total volume and you have your effective rate, the real percentage you pay. That single division beats every rate you were ever quoted. If you want the full method, our guide on how to calculate what you really pay walks through it step by step.

Where is the markup on your statement?

Where the markup sits depends on which pricing model you are on, so figure that out first. It tells you exactly where on the statement to look.

The fastest tell of all: if your statement never separates interchange from markup, that is a choice, not an accident. Transparent pricing has nothing to gain from hiding the line.

Which statement fees are not interchange?

The fees that are not interchange are the flat, dollars-per-month line items, the ones that have nothing to do with your card cost. Scan for these names and ask what each one is actually for.

• Monthly fee, service fee, or account fee, a flat charge just to have the account.
• Statement fee, a charge to send you the statement you are reading.
• PCI compliance fee, and worse, a PCI non-compliance fee if a form lapsed.
• Batch fee, charged each time you settle the day’s sales.
• Monthly minimum, a penalty if your fees did not reach a floor.
• Gateway or technology fee on online and keyed sales.

None of these are interchange. They are markup wearing official-sounding names. Some are legitimate costs passed straight through. Many are pure padding. We break down which is which in our guide to catching the junk fees.

A five-minute reading order

1. 01Pull volume, total fees, and transaction count. Divide fees by volume for your effective rate.
2. 02Identify the pricing model from how the fees are presented.
3. 03List every flat monthly fee and total them. That is your fixed cost before a single sale.
4. 04Estimate your interchange floor near 1.95 percent of volume for a typical mix, and subtract it from total fees to approximate your markup.
5. 05Compare that markup to a flat per-transaction price, your transaction count times a dime, and see which wins.

Do this two months running and you will know more about your processing cost than most owners ever do, and exactly which line to question first.