How To Read A Merchant Processing Statement

Reading your merchant processing statement can be complicated. For starters, there are no standards or standards that control them, so seller statements can vary from one processor to the next. This absence of guidelines allows processing firms to make your statement difficult to read deliberately to hide the likely possibility that you’re overpaying them.

Because of this, it is necessary to recognize how to comprehend your merchant card processing statement. Don’t just eye it and push it to the side. Really make the effort to analyze the details so you can figure out just how much you’re paying in charges. Doing so can conserve you hundreds, perhaps thousands of dollars per month.

To aid you to complete that, you can have a look at this sample merchant processing statement. This was sent to us by a business to do a rate comparison. We’ll be going through the actions we took to analyze the numbers. We advise you to tag along utilizing your merchant processing statement.

Step 1: Calculate Your Overall Rate.
When you first signed up with your charge card processor, they may have offered you a reduced rate. Or a variety of prices for processing charge cards. While those figures can provide you a ballpark of how much you’re paying, the most exact way to identify your fees is to run the real numbers you are being charged. We call this action discovering your reliable price.

To do that, split the complete dollar amount that you processed by the complete costs charged by your processor. Or, adhere to the formula:

Overall Merchant Rate = Overall Charges Billed/ Overall Amount Processed x 100

Allow us to check out just how this applies to a real merchant, using this example below.

Merchant Processing Statement

Merchant Processing Statement


Using the formula above, we have actually calculated that this merchant’s effective rate is about 2.92%.

$1,506.68/ $51,634.88 = 0.0291795 x 100 = 2.917%.

Run the same computation with your merchant account statement. Find your total costs after that divide it by the total quantity that you processed, so you can determine your overall rate.

When you have that you’ll be able to see just how much of your paying to the card issuers (Visa, Mastercard, Discover) and just how much you’re paying your processor.

Step 2: Establish Your Interchange Fees.
As we formerly reviewed, your interchange fees are the charges billed by card companies. Your Merchant Services company does not manage these prices. Every merchant pays the interchange rates.

Now find the section that details your interchange prices. In this sample merchant processing statement, there are columns in that show the interchange rate as well as expense per sale.

You can see below that the rate billed on every card is different as well as the sample DOES demonstrate how much is going to Visa/MC/Amex/ Disc. On this page, interchange expenses were as low as 1.9% and as high as 2.86%. 

Merchant Account Statement

Merchant Account Statement

When you find your interchange rates, add up your total interchange prices.

In the case of this merchant, their total interchange costs totaled up to $982.33.

Reading Your Merchant Statement

Reading Your Merchant Statement

Step 3: Subtract Your Total Interchange Fees From The Complete Fees Charged.

At this stage, you’ve currently identified the costs that you’re paying. The following action is to locate the fees that are likely going to your merchant provider. This component is rather simple. Remember the overall fees that you’ve identified in step 1? Take that number, and subtract your interchange costs from that total.

Processor’s Fees = Overall Charges – Total Interchange Chargers.

Going back to the sample merchant processing statement above. Their overall charges were $1,506.68, so we subtracted the interchange expenses of $982.33, leaving us with $524.35.

$1,506.68– $982.33 = $524.35

When you have discovered your number, then you’ve essentially identified the markup of your merchant processing provider. Look and see how your costs measure up to other merchant processors. Now that you know just how much you’re paying in costs, it might be time to search and see if you can decrease your costs.

Merchant Processing Statement Analysis

At FintechMerchantAccounts we will provide a complimentary merchant processing statement analysis for your business. You can send us your merchant processing statement and one of our specialists will put together a detailed comparison.

But wait there is more! If we can not lower your cost we will give you a $500 Visa gift card for giving us the opportunity. You can find the details HERE. If you have any other questions you can also call us at (617) 918-7235.

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