How to Read Your Merchant Account Statement (And know if your merchant processor is overcharging you)
As a business owner, you need to know how to read and understand your merchant statement.
Do you know if your merchant fees are reasonable?
Many business owners do not bother to read their merchant statements because they are intimidated or find it hard to understand.
It is imperative that you learn to review your merchant statement because ignoring it may cost your business a small fortune.
We recommend that you review your merchant’s statement every month as it arrives. Doing so will help you weed out mistakes and identify areas such as overspending – which in turn will help you save money on excessive processing fees.
There are several factors you must focus on when reviewing your merchant account statement.
- Markups – Check the markup rates you are paying – does your merchant competitive rates?
- Base Cost – is your merchant charging you a fair and reasonable base cost amount? Or if you can reduce this cost?
3 Steps to Assess Your Merchant’s Account Statement
Here is a simple 3-step process to assess your merchant statement.
First, you must separate wholesales and base cost from the markups. Your assessment and interchange fees make up your “base” or “Wholesales” cost. Whereas, your markup is the only negotiable component of your processing cost and includes any charges on top of your base cost.
That said – you must familiarize yourself with your merchant statement to avoid any confusion during the review.
Understand the pricing structure your payment processing merchant uses to access fees.
Tiered Pricing Model
A tiered pricing model divides your transaction into different tiers, aka “buckets.” Your merchant then charges you for each transaction based on its tier. Mid-qualified, qualified, and non-qualified are the three standard tiers, and each of them has different pricing.
The last step will be to identify your merchant’s discount method. Most credit card processing
Companies apply daily or monthly discounts on their fees. The discount method affects the way the merchant calculates the total fees on your statement.
In the case of monthly discounts, your payment processor applies the discount when charging the entire processing fees at the end of each month.
On the other hand, with daily discounts, the payment processor applies a discount on each transaction and bills you the discounted charges at the end of each month.
4 Sections of a Merchant Statement
You can divide your merchant’s statement into four main sections. However, some statements may contain fewer or more parts.
Section # 1: Account Alerts
You can see account alerts on the first page of your merchant’s account statement. Here you will find reminders or notification regarding issues such as rate adjustments and PCI compliance.
Section #2: Total Charge to Your Account
Your total charges you are liable to pay are also visible on the front page of your merchant’s statement.
Section # 3: Summary of Deposits
This section displays the total card volume your business processed in a month. Moreover, you will find the information with a breakdown for each card type and a total at the bottom.
Section # 4: Summary of Miscellaneous Fees
The summary section mentions your fixed monthly fee for PCI compliance and statement costs charged by your merchant account provider. You may also notice a “customer service fee” in this section.
Data One Merchant Services brought this article to you. We hope to win your business by helping you identify ways you can save an exponential amount of money by avoid overpaying your payment processing merchant.
We are a company you can trust, with a reputation for transparency and excellence.
For a free statement review, quote or consultation, contact us at 800-818-0420.