How to Read Your Merchant Statement
Merchant processing statements can be confusing. Between interchange fees, assessments, transaction fees, monthly fees, chargebacks, and other charges, it can be difficult to know exactly what you're paying—or whether your pricing is competitive. This guide will help you understand the most common sections of a merchant statement, identify the fees you should review, and calculate what you are actually paying to accept credit and debit cards.
How to Read Your Merchant Statement
Understand your credit card processing fees and find out where your money is going.
Your merchant statement contains important information about your sales, transactions, deposits, processing costs, and fees. The problem is that every processor formats statements differently, and many of the charges are described using industry terminology that isn’t easy for most business owners to understand.
We’ll break down the most important parts of a typical merchant processing statement so you know what to look for.
Understanding Your Processing Volume
The First Numbers You Should Find
Before looking at individual fees, find these four numbers on your statement:
Total Processing Volume
The total dollar amount of card payments your business processed during the statement period.
Number of Transactions
The number of credit and debit card transactions processed.
Total Fees
The total amount deducted or billed for payment processing and related services.
Net Deposits
The amount deposited into your bank account after applicable processing fees, refunds, chargebacks, and other adjustments.
These numbers give you a starting point for evaluating your overall processing costs.
Quick Calculation: Your Effective Processing Rate
A simple calculation can help you understand what percentage of your card sales went toward processing fees:
Total Processing Fees ÷ Total Processing Volume × 100 = Effective Processing Rate
Example
If your business processed $50,000 in card sales and paid $1,500 in total processing fees:
$1,500 ÷ $50,000 × 100 = 3.0%
Your effective processing rate for that month was 3.0%.
This number alone doesn’t tell you whether you are paying too much, because card mix, transaction types, business category, and pricing structure all affect costs. But it gives you a useful starting point for comparing one statement period to another.
Important: Don’t compare your effective rate directly with another business unless the businesses have similar card types and transaction patterns.
Start with the Big Picture
The First Numbers You Should Find
Before looking at individual fees, find these four numbers on your statement:
Total Processing Volume
The total dollar amount of card payments your business processed during the statement period.
Number of Transactions
The number of credit and debit card transactions processed.
Total Fees
The total amount deducted or billed for payment processing and related services.
Net Deposits
The amount deposited into your bank account after applicable processing fees, refunds, chargebacks, and other adjustments.
These numbers give you a starting point for evaluating your overall processing costs.
Quick Calculation: Your Effective Processing Rate
A simple calculation can help you understand what percentage of your card sales went toward processing fees:
Total Processing Fees ÷ Total Processing Volume × 100 = Effective Processing Rate
Example
If your business processed $50,000 in card sales and paid $1,500 in total processing fees:
$1,500 ÷ $50,000 × 100 = 3.0%
Your effective processing rate for that month was 3.0%.
This number alone doesn’t tell you whether you are paying too much, because card mix, transaction types, business category, and pricing structure all affect costs. But it gives you a useful starting point for comparing one statement period to another.
Important: Don’t compare your effective rate directly with another business unless the businesses have similar card types and transaction patterns.
Understanding Your Processing Volume
Gross Sales, Returns and Net Sales
Your statement may show several versions of your sales total.
Gross Sales: The total amount charged to customer cards before refunds or other adjustments.
Returns or Credits: Money returned to customers.
Net Sales: Gross sales minus returns and credits.
For example:
- Gross card sales: $100,000
- Refunds: $5,000
- Net card sales: $95,000
Your processing fees may be calculated against different categories depending on the processor and fee involved, so it is important to understand which sales figures are being used.
What to Check
- Does your reported volume match your POS or accounting records?
- Are refunds and credits accurately recorded?
- Are there unusual changes from the previous month?
- Did your card volume increase or decrease significantly?
A sudden increase in fees may be caused by higher volume—but it could also be caused by a change in your mix of cards or additional fees.
Interchange Fees Explained
What Is Interchange?
Interchange is one of the major costs associated with accepting credit and debit cards. Visa and Mastercard describe interchange as a fee component involved in the payment system between acquiring and issuing financial institutions.
The important point for merchants is that interchange is only one component of your total processing cost. Your processor or acquirer may add its own pricing, services, and fees on top of interchange.
Visa explains that merchants negotiate and pay a merchant discount to their financial institution, while interchange reimbursement fees operate within the payment system. Mastercard similarly explains that interchange is one component of the Merchant Discount Rate established by the acquirer.
Why Interchange Is Not One Flat Rate
Different transactions can qualify for different interchange categories based on factors such as:
- Card type
- Credit or debit card
- Rewards or commercial card
- Whether the card was present
- Whether the transaction was keyed manually
- How quickly the transaction was settled
- Merchant category
- Transaction amount
- Other qualification requirements
Mastercard publishes rate information and explains that transaction characteristics and qualification criteria can affect the applicable interchange rate.
Official Resources
If want to learn more directly from the card networks:
- Visa: Credit Card Processing Fees & Interchange Rates
- Mastercard: Interchange Fees & Rates Explained
- Visa USA Interchange Reimbursement Fees
Card Brand and Network Fees
What Are Assessments and Network Fees?
In addition to interchange, merchant statements may include fees associated with the card networks. Depending on the statement and processor, these charges may appear under names such as:
- Assessments
- Network fees
- Acquirer fees
- Card brand fees
- NABU fees
- FANF
- Network access fees
- Other card-related fees
The exact names and presentation can vary significantly between processors.
Why You Should Review Them
Look for:
- Fees that appear unexpectedly
- Fees that increased significantly
- Charges that are difficult to identify
- The same fee appearing more than once under different categories
A good statement review should identify what each major fee category represents rather than simply adding all charges together.
Processor Markup
This Is the Section Business Owners Should Review Closely
Your processor’s pricing may appear as a percentage, a per-transaction amount, a monthly fee, or a combination of several charges.
Depending on your pricing plan, processor markup may be listed as:
- Discount rate
- Qualified rate
- Non-qualified rate
- Mid-qualified rate
- Authorization fee
- Transaction fee
- Processing fee
- Service fee
- Acquirer fee
- Margin
- Markup
The terminology varies.
Common Pricing Structures
Interchange-Plus Pricing
With interchange-plus pricing, interchange and processor markup are generally shown separately.
For example:
Interchange + 0.30% + $0.10 per transaction
The actual interchange cost can vary by transaction, while the agreed processor markup remains the additional percentage and transaction fee.
Tiered Pricing
Transactions may be grouped into categories such as:
- Qualified
- Mid-qualified
- Non-qualified
The challenge with tiered pricing is that the statement may not make it easy to see the underlying interchange cost or determine why individual transactions fell into a particular category.
Flat-Rate Pricing
Some providers charge one advertised rate for certain transactions. This can be simple to understand, although the best pricing model depends on the business, transaction volume, average ticket, card mix, and other factors.
Bottom line: Don’t judge a statement by one advertised rate alone. Review the total cost and how the pricing structure works.
Transaction Fees
Small Fees Can Add Up Quickly
Many processors charge a fee for each transaction processed.
This might appear as:
- $0.10 per transaction
- $0.15 authorization fee
- Per-item fee
- Transaction fee
- Batch fee
Example
If your business processes 2,000 transactions per month and pays $0.10 per transaction, that one fee equals:
2,000 × $0.10 = $200 per month
Over a year, that would be:
$2,400
Transaction fees should always be evaluated alongside percentage-based fees and monthly charges.
Monthly and Annual Fees
Look Beyond the Processing Rate
Some merchant statements include recurring fees that are not directly tied to the dollar amount of sales.
Examples may include:
- Monthly account fee
- Statement fee
- PCI-related fee
- Compliance fee
- Gateway fee
- POS software fee
- Terminal rental fee
- Annual fee
- Account maintenance fee
- Customer service fee
Not every processor charges all of these fees, and some services may be appropriate for your business. The key is knowing what you are paying for and whether you agreed to the charge.
Questions to Ask
- Is this fee listed in my merchant agreement?
- What service am I receiving for this charge?
- Is the fee charged every month or once per year?
- Has the amount changed?
- Can the fee be removed or reduced?
- Am I paying for a service I no longer use?
PCI and Compliance Fees
What Does PCI Have to Do With Your Statement?
Businesses that accept payment cards have security responsibilities related to protecting cardholder data. Your processor may show PCI-related services or fees on your statement.
These charges can be labeled differently depending on the provider.
Possible labels include:
- PCI fee
- PCI compliance fee
- Non-compliance fee
- Security fee
- Compliance program fee
Important: Read the Description
A “PCI fee” and a “PCI non-compliance fee” may represent very different things.
If you see a recurring charge you don’t understand, ask your processor:
“What exactly is this fee, what triggers it, and what do I need to do to avoid it if it is avoidable?”
Keep copies of your merchant agreement, compliance notices, and processor communications so you can compare them with your statement.
Chargebacks, Retrievals and Other Adjustments
Watch for Unexpected Deductions
Your statement may include adjustments for:
- Chargebacks
- Chargeback fees
- Retrieval requests
- Refunds
- ACH returns
- Account adjustments
- Reserve activity
A chargeback generally involves a disputed card transaction. The statement should help you identify the transaction and associated charges.
What to Review
- The transaction date
- The disputed amount
- Any chargeback or administrative fee
- Whether the chargeback was won or lost
- Whether funds were deducted temporarily or permanently
- Any deadline for responding to the dispute
If you don’t recognize a chargeback or adjustment, contact your processor promptly and ask for documentation.
Deposits and Funding
Why Doesn’t My Deposit Match My Daily Sales?
Your bank deposits may differ from your sales because of:
- Processing fees
- Refunds
- Chargebacks
- Funding delays
- Weekend or holiday timing
- Batch timing
- Reserve holds
- Other adjustments
Your merchant statement should help reconcile processed sales with deposits and deductions.
Review Your Funding Schedule
Check your agreement or ask your processor:
- When are transactions funded?
- Is funding next business day?
- Are weekends treated differently?
- Are certain transaction types funded later?
- Are fees deducted daily or monthly?
Understanding your funding schedule can make bookkeeping and cash-flow planning easier.
How to Calculate Your Total Cost
Don’t Just Look at One Line Item
To understand your overall cost, add together all relevant fees shown for the statement period.
This may include:
Interchange-related costs + network fees + processor fees + transaction fees + monthly fees + other applicable charges
Then compare the total against your processing volume.
Effective Rate Formula
Total Merchant Processing Costs ÷ Total Card Processing Volume × 100
Example
| Statement Item | Amount |
|---|---|
| Interchange-related costs | $1,100 |
| Network fees | $125 |
| Processor fees | $300 |
| Transaction fees | $175 |
| Monthly fees | $75 |
| Total fees | $1,775 |
| Total card volume | $60,000 |
| Effective rate | 2.96% |
This example is for illustration only. A lower effective rate is not automatically better, and a higher rate is not automatically evidence of overcharging. Your transaction mix and business model matter.
Red Flags to Look for on Your Statement
10 Things Worth Investigating
- Fees you cannot identify
- A large increase in total fees without a similar increase in sales
- Multiple recurring monthly charges
- A rate that does not match your merchant agreement
- Unexpected annual or semiannual fees
- PCI-related charges you don’t understand
- Equipment charges for equipment you don’t use
- High transaction fees combined with high percentage fees
- Large differences between your sales and funded deposits
- Charges that suddenly appear for the first time
A fee is not necessarily improper just because it is unfamiliar. The goal is to understand every significant charge and determine whether it matches your agreement and the services being provided.
What If Your Statement Is Too Confusing?
You Don’t Have to Figure It Out Alone
Merchant processing statements are often designed around payment-industry terminology rather than the way a business owner naturally thinks about expenses.
A statement review should help answer simple questions:
How much did I process?
How much did I pay?
What am I paying for?
Which costs are card-related and which are processor-related?
Are my fees consistent with my agreement?
Are there services or charges I no longer need?
Helpful Official Resources
Visa
Visa publishes information about interchange reimbursement fees, merchant discount pricing concepts, payment acceptance rules, and merchant surcharging requirements. Visa notes that interchange reimbursement fees are part of the payment system, while merchants negotiate their overall merchant discount with their financial institution.
Visit Visa’s Merchant Fees & Regulations Resources
Mastercard
Mastercard explains that interchange is one component of the Merchant Discount Rate established by an acquirer and provides information about factors that can affect interchange qualification.
Visit Mastercard’s Merchant Interchange Resources
IRS Recordkeeping Resources
The IRS provides guidance on business recordkeeping and deductible business expenses. The IRS also notes that business expenses generally must meet applicable requirements such as being ordinary and necessary. Businesses should consult a qualified tax professional regarding their specific tax situation.