How to read a merchant statement without a decoder ring

To read a merchant statement, start with two numbers on the summary page: total sales processed and total fees charged. Divide fees by sales to get your effective rate, then sort the fee lines into card-network costs and processor charges to see what your processor actually keeps.

Learning how to read a merchant statement takes about fifteen minutes the first time. After that, a monthly check takes two. The layout varies by processor, but almost every statement has the same building blocks.

The four parts of most statements

Section	What it shows	What to look for
Summary	Total sales, refunds, fees and net deposits for the month	Total sales and total fees
Deposits or batches	Each day’s deposit and any fees taken out	Whether fees come out daily or monthly
Card summary	Volume and count by card brand and card type	Your mix of debit, credit, rewards and business cards
Fees detail	Every fee, often line by line	Which lines are pass-through and which are the processor’s

Some statements also include a messages section at the bottom. Read it. Notices of fee changes are often posted there rather than sent separately.

Step by step: from summary to the real cost

1. Find total sales processed. Use the gross card volume for the month, before refunds.
2. Find total fees. Include every fee: percentage fees, per-transaction fees, monthly fees and any annual or one-time charges.
3. Calculate your effective rate. Total fees divided by total sales. Our guide to the effective rate explains how to use it.
4. Mark the pass-through costs. Interchange and card-network fees, sometimes labeled assessments, network access or brand fees.
5. Mark everything else. Markup, per-item fees, monthly service fees, statement fees, PCI fees, gateway fees. This is what the processor keeps.
6. Compare month to month. If the effective rate rose but your card mix didn’t change, find the line that moved.

An example

Here is a hypothetical example with round numbers, not real merchant data. Say a statement shows $40,000 in card sales and $1,100 in total fees. The effective rate is $1,100 divided by $40,000, or 2.75%. If the fee detail shows about $750 in interchange and network fees, the remaining $350 is what the processor kept that month. That $350 is the number to compare between providers, because the $750 would be about the same with anyone.

How the pricing model changes the layout

What you see depends on how you’re priced:

• Interchange-Plus statements list interchange by category, network fees separately and the processor’s markup on its own lines. They’re long but auditable.
• Tiered statements show volume in qualified, mid-qualified and non-qualified buckets, each with its own rate. Interchange is hidden inside those rates. Watch how much lands in the higher buckets.
• Flat-rate statements show one rate on all volume. They’re short, but there’s nothing to separate. The effective rate is the main check.

If your statement doesn’t let you tell interchange from markup, that is useful information in itself. Our comparison of interchange-plus vs. flat rate vs. tiered explains why.

Statement terms, translated

Statements use a vocabulary of their own. These are the terms that come up most, in plain English first:

Term on the statement	What it means
Gross sales or volume	All card sales before refunds and fees
Net deposit	What actually landed in your bank account
Discount or discount rate	The percentage fee on card sales. What it includes depends on your pricing model
Interchange or IC	The fee paid to the bank that issued the card
Assessments, dues or network fees	Fees charged by the card brands themselves
Authorization or auth fee	A charge each time a card is checked for approval, even if declined
Batch or settlement fee	A charge each time you close out and send the day’s sales
Chargeback fee	A charge when a customer disputes a sale with their bank

The same fee can go by different names at different processors. If a label doesn’t tell you what the fee is for, that is a fair question to ask. A good processor can explain every line on its own statement in a sentence or two, and should be willing to do it on the phone.

One more tip: watch the difference between daily and monthly discount. Some processors take fees out of each day’s deposit, while others take them in one debit at the start of the next month. Neither is wrong, but it changes where the total appears, so make sure you’re counting every fee once and only once.

Line items worth a second look

Not every small fee is a problem, but these deserve a question to your processor:

• A PCI non-compliance fee charged every month
• A monthly minimum fee, which charges the difference when your fees fall below a set amount
• Fees labeled only as service, maintenance or regulatory with no explanation
• A rate increase notice in the messages section
• Downgrade or non-qualified surcharges on a large share of your volume
• Equipment lease charges for a terminal you thought you owned

Our list of common merchant statement fees explains what each one usually means and which ones are standard.

Keep at least three months of statements side by side. One month can be skewed by a holiday or a large refund. Three months show the trend.

What PayZoom does

Reading statements is where we start with every merchant. Send us one recent statement and our free statement analysis will line-item every fee, separate what the card networks charge from what your processor keeps, and give you a plain-English answer. If your current rate is fair, we’ll say so. If you move to PayZoom, you’ll get Interchange-Plus pricing with our margin on its own line, no early termination fees and no non-compliance fees. Read more about our credit card processing, or call 866.242.4325 and a real person will walk through it with you.