How to read your merchant statement, line by line

Before you read a single line item, find two numbers on the summary page: total card sales (sometimes called “total volume” or “gross sales”) and total fees (sometimes “total fees charged” or “discount and fees”).

This one number lets you compare months, compare processors and check a sales rep’s quote. A rep may quote a low “rate”, but what you actually pay is the effective rate.

1. Interchange. The largest part. It goes to the bank that issued your guest’s card. Card networks set these rates and publish them. They differ by card type (debit, standard credit, rewards, business), by how the card is taken (tapped or dipped vs keyed-in or online) and by type of business. You can’t negotiate interchange, but you can make sure your transactions qualify for the right rate.

Debit cards from large banks are much cheaper. Their interchange is capped under federal rules: Visa’s current schedule lists them at 0.05% + 21¢, plus 1¢ for fraud prevention where the bank qualifies.

2. Card-brand fees (also called assessments or network fees). Small fees paid to Visa, Mastercard, Discover and American Express. They show up under names like “Visa assessment”, “MC NABU” or “FANF”. These are also not negotiable, but they should be passed through at cost.

3. Processor markup and fees. Everything your processor adds: a percentage, a per-transaction fee, and monthly or yearly charges. This is the only layer that is negotiable.

As Visa explains, merchants don’t pay interchange directly. They pay a “merchant discount” to their processor or bank, which includes it.

Your statement’s layout tells you how you are priced:

• Flat rate: one rate for all cards, like “2.6% + 15¢”. Interchange is not shown, because the processor keeps the difference. Simple to read, but you can’t see the markup.
• Interchange-plus (also “cost-plus” or “pass-through”): every interchange category is listed at cost, then the processor’s markup is shown on its own, like “0.20% + 7¢”. The easiest to audit.
• Tiered: transactions are sorted into “qualified”, “mid-qualified” and “non-qualified” buckets with rising rates. The processor decides which bucket each sale lands in, so it is the hardest to check.

If you see lots of “non-qualified” or “mid-qualified” charges, sales are being moved to the expensive buckets (“downgrades”). Our guide to flat-rate vs interchange-plus compares the models with real numbers.

Layouts differ by processor, but most statements have the same parts:

1. Summary. Total sales, refunds, chargebacks, fees and the amount paid to your bank. Your effective rate comes from here.
2. Deposits or batches. One line per day or per batch. Check that the deposits match what arrived in your bank account.
3. Card type summary. Sales and number of transactions by card brand, and sometimes debit vs credit. Use it to work out your average ticket.
4. Interchange detail (interchange-plus only). Each category with its rate, count and total. Look for “EIRF”, “standard” or “non-qualified” lines: those are downgrades.
5. Processor fees. Markup, per-item fees, and account fees.
6. Messages. The small print at the end. Rate increases and new fees are often announced here, so read them every month.

• Discount rate / markup: the processor’s percentage on every sale.
• Transaction or authorization fee: a fixed amount per sale, sometimes per attempt.
• Batch or settlement fee: charged each time the day’s sales are closed out.
• Statement fee: a monthly fee for the statement itself.
• PCI compliance fee: a monthly or yearly fee for the security program.
• PCI non-compliance fee: an extra charge because the yearly security questionnaire wasn’t done. It usually goes away once you complete it.
• Monthly minimum: a top-up charge if your markup doesn’t reach a set amount.
• Gateway or POS software fee: for online payments or the system you use.
• Chargeback fee: charged each time a guest disputes a payment.

Some of these are normal. The question is whether each one is in your contract, at the amount agreed, and still needed.

An example restaurant takes $60,000 a month in card sales over 2,000 transactions (a $30 average ticket). Nearly every card is tapped or dipped. Its statement shows:

Interchange and card-brand fees are $1,104. Everything else, $565, is the processor’s. Our processing fee calculator assumes a fair markup of 0.20% + 7¢ per transaction. At that markup, this example restaurant would pay about $1,364 (2.27%): about $305 a month less, or $3,660 a year. Filling in the PCI questionnaire accounts for $40 of that on its own.

1. Work out your effective rate for the last three months.
2. List every fee that isn’t interchange or a card-brand fee, with its amount.
3. Find your contract and check each one against it, along with any early-termination fee.
4. Call your processor with the list. The negotiation playbook has scripts.
5. Get one or two quotes on interchange-plus pricing to compare.