What is a merchant statement?
A merchant statement is the monthly report from the company that processes your card payments. It lists the card sales you took, the fees taken out, and what landed in your bank account. You may also hear it called a credit card processing statement. The fees are usually on the later pages, after the deposit summary.
It works like a bank statement, except this one shows what the processor kept. If your point-of-sale (POS) software also processes your cards, the statement may come from the software company instead of a separate processor. Either way, that is the document to read.
Pull out your most recent statement, every page, before you go on. A highlighter and a calculator help.
What is my effective rate, and how do I find it?
Your effective rate is your total fees for the month divided by your total card sales for the month. If it comes to 3%, then $3 of every $100 you run through the card machine goes to fees. It is the one number that lets you compare any two statements fairly.
- Find your total card sales for one month. It may be labeled total volume, gross sales, or amount submitted. Leave out cash.
- Find your total fees for the same month. Some statements print one total. If yours does not, add up every fee line, including the monthly ones.
- Divide the fees by the sales, then multiply by 100. That is your effective rate.
Here is the math with made-up numbers. Say a business runs $20,000 in card sales and pays $600 in fees. $600 divided by $20,000 is 0.03, so the effective rate is 3%. That is $3 of every $100.
Check for fees billed on the side
On some statements, a few fees are billed separately or taken from your bank account instead of coming out of your deposits. If you see a section for fees billed separately, count those too. If you are not sure, look at your bank statement for monthly charges from your processor.
What are interchange, dues and assessments, and processor markup?
Every processing fee is built from three parts. Interchange goes to the bank that issued your customer's card. Dues and assessments go to the card networks. Processor markup is what your processor keeps. Your processor passes the first two along, and the third is the part that differs from one processor to the next.
| Part | Who it goes to | What to know |
|---|---|---|
| Interchange | The bank that issued your customer's card | Visa's own page calls these transfer fees between the acquiring bank and the issuing bank. Rates can differ by kind of card and kind of sale. |
| Dues and assessments | The card networks | Charges from the networks themselves. On an interchange-plus statement they are usually listed by name. On other pricing models they are folded into the rate. |
| Processor markup | Your processor | The percentage and per-transaction amounts the processor adds on top. This is the part that differs from one processor to the next, so ask about it first. |
When you compare processors, you are mostly comparing the third part, plus the monthly extras covered below.
What do the pricing models look like on a statement?
Most statements follow one of four pricing models. Interchange-plus lists network costs by name and adds a markup. Tiered sorts your sales into buckets with different rates. Flat-rate charges one percentage on every sale. Dual pricing or a surcharge shows the card fee to the customer at checkout. Each model shows or hides different things.
| Model | What you will see | What to watch |
|---|---|---|
| Interchange-plus | Interchange and assessments listed by name, then the processor's markup as a percentage plus a per-transaction amount. | The markup numbers, and any monthly fees added on top. |
| Tiered | Sales sorted into buckets with names like qualified, mid-qualified and non-qualified, each with its own rate. | Which bucket your sales land in, and who decides. Ask for a list of what lands where. |
| Flat-rate | One percentage, often with a per-transaction amount, on every card sale. | You cannot see the pieces, so lean on your effective rate to judge it. |
| Dual pricing or surcharge | The processing fees still show on your statement. The difference shows on the customer's receipt, where a card price or a surcharge appears. | The notice and receipt rules, and your effective rate before and after. Georgia's rules are in our card processing FAQ. |
None of these is wrong for every business. A flat rate is simple to follow. Interchange-plus shows more of the detail. What matters is the number at the bottom, so compare effective rates, not the headline rate in a quote.
Which fees on my statement are worth questioning?
Ask about any fee you cannot explain, and start with the monthly extras: a PCI non-compliance fee, a statement fee, an annual or regulatory fee, a monthly minimum, batch fees, and equipment lease payments. Some are fair charges for a real service. Others deserve a second look. You will not know which until you ask what each one covers.
| Fee name | What it usually is | Worth asking |
|---|---|---|
| PCI non-compliance fee | A monthly charge some processors add when you have not completed the yearly card-security questionnaire their agreement asks for. | What do I need to send to stop it, and where is it in my agreement? |
| Statement fee | A monthly charge for producing your statement. | What does it cover, and is it in my agreement? |
| Annual or "regulatory" fee | A yearly charge, sometimes with an official-sounding name. | Who sets this fee, and what does it pay for? |
| Monthly minimum | A top-up charge when your fees for the month come to less than the minimum in your agreement. | What is my minimum, and do I come close to it in slow months? |
| Batch fee | A charge each time you close out the day's card sales. | How many batches do I close each month? |
| Equipment lease | Monthly payments for a card terminal you lease instead of own. | How long is the lease, what is the total I will pay, and can I buy the terminal or end the lease early? |
On the PCI fee: the PCI Security Standards Council publishes the security standard, and says whether a business must prove it meets the standard is up to the card brands and the banks behind processors. Your processor's agreement sets the fee. Read more in what a PCI non-compliance fee is.
What does a month of fees add up to?
Here is a made-up month for a small shop with $20,000 in card sales. The numbers are for teaching only. They are not a quote and not a typical statement. Add the lines and the fees come to $600, a 3% effective rate. Then sort each line to see where the money went.
| Line | What it is | Amount | % of sales |
|---|---|---|---|
| Interchange | Paid to card-issuing banks | $360.00 | 1.80% |
| Dues and assessments | Paid to the card networks | $30.00 | 0.15% |
| Processor markup | Percentage on sales | $60.00 | 0.30% |
| Per-transaction fees | 600 sales at $0.10 | $60.00 | 0.30% |
| Statement fee | Monthly | $10.00 | 0.05% |
| Batch fees | 20 batches at $1.00 | $20.00 | 0.10% |
| PCI non-compliance fee | Monthly | $20.00 | 0.10% |
| Equipment lease | Monthly | $40.00 | 0.20% |
| Total fees | On $20,000.00 in card sales | $600.00 | 3.00% |
Now sort the lines into three buckets. The network costs are interchange plus dues and assessments. The processor's markup on sales is the percentage plus the per-transaction fees. The monthly extras are the statement, batch, PCI and lease lines.
| Bucket | Lines in it | Amount | % of sales |
|---|---|---|---|
| Network costs | Interchange, dues and assessments | $390.00 | 1.95% |
| Processor markup on sales | Percentage and per-transaction fees | $120.00 | 0.60% |
| Monthly extras | Statement, batch, PCI, equipment lease | $90.00 | 0.45% |
| Total fees | $600.00 | 3.00% |
In this made-up month the monthly extras are small next to the network costs, but they are the lines worth a phone call, because each one is a choice somebody made in an agreement. Whether any of them can change depends on your own agreement, and we do not know that until we read it with you.
These numbers are invented
Every dollar figure in this example is made up to show the arithmetic. Real statements vary with the kinds of cards your customers use, your average sale, and your agreement.
What should I do after I read my statement?
Write down your effective rate and circle every fee you cannot explain. Then ask your processor to explain each one in writing. If you want a second pair of eyes, Norvet MSP offers a free statement review, with no pressure to switch.
- Write your effective rate at the top of the statement.
- Circle every fee you cannot explain and ask your processor what each one covers.
- Find your contract end date and any early termination fee before you talk about changing anything.
- Lay two or three months side by side. A rate that jumps from one month to the next is worth asking about.
If your software also takes your payments, read how to lower card processing fees without changing your POS software next. For short answers to the words on your statement, see the card processing FAQ.
Common questions
What is a good effective rate?
There is no single good number. It depends on the kinds of cards your customers use, your average sale, your monthly volume, and how you take payments. Track your own rate each month, and compare it against a real quote built from your own statement.
Why does my effective rate change from one month to the next?
Your mix of cards and sales changes, and fixed monthly fees weigh more in a slow month. Refunds and keyed-in sales can move it too. A big jump from one month to the next is worth a question to your processor.
Is a lower effective rate always better?
Not always. Support, contract length, equipment, and how quickly you get paid matter too. A slightly higher rate with a short contract and a person who answers the phone can beat a lower rate with a long lock-in. Look at the whole agreement, not just the rate.
Can someone at Norvet MSP read my statement with me for free?
Yes. The statement review is free, with no obligation. You tell us how to reach you, a person replies within one business day, and we read the statement with you line by line. You decide what to do next, and there is no pressure to switch.
Do I have to upload my statement on this site?
No. There is no upload on this site yet. Send a request through the free statement review, or call (833) 281-9898. Nothing needs to be attached to your request. We ask for a recent statement in our reply, once we have your contact details.
How do I get my statement reviewed for free?
Send us a request through the free statement review, or call (833) 281-9898. Tell us how to reach you, and a person from Norvet MSP replies within one business day. We read your latest statement with you and explain each fee. You decide what to do next, and there is no pressure to switch.
Next you pick your industry and software, then tell us how to reach you. There is no file to upload.