understanding merchant service statements

Merchant Service Statement Guide A Must Read

Understanding Merchant Service Statements

If you own a business and you accept credit cards than your probably already aware of just how difficult it can be understanding merchant service statements.   Accepting credit card payments is a must for any business type.  However, to know or understand what you’re paying for can be complicated.  And unfortunately asking your service provider doesn’t always do the trick to helping you clear the confusion.

Understanding merchant service statements can be time-consuming, and unfortunately, sometimes the confusion is done on purpose.  Merchant service providers who are not on the up and up use their statements as a way to confuse not only the business owner but other merchant service providers as well.  Their thought process is to hide or manipulate the numbers so that a true assessment of fees cannot be easily picked out.  Therefore, making it difficult for both the owner as well as the next merchant service agent that comes knocking on your door.

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In looking at the first page, one of the most crucial parts of the statement is the image below.  The section is crucial, yet many business owners do not perform a quick calculation that can affect the financial success of their business.


card processing statement

Taking the fees charged divided by the total amount submitted provides you with .02917.  If we move the decimal point two places, we get 2.917 which means that this particular business is paying 2.91% effective rate for all their transactions.  Once you have this number, it can be used as a cost of doing business and factored into the price of items being sold or serviced.  It can also be used as an average to determine if your business is getting charged more than it should.


#2 Understanding Merchant Service Statements on Page One in Review

When reviewing and understanding merchant service statements, there are typically two main areas that you want to review quite thoroughly.  The first section on the first page typically lists your qualified rate or the rate that you were quoted upon signing.  As you can see in the image below, this rate is clear and obvious.  The front page of most statements is usually clear and provides information that easily makes sense.  The theory is that owners are typically only going to look at the first page to make it clear and decisive.


merchant service statement page 1

The first-page rate listing is a great place to start because it allows the owner to verify that they are getting charged the rate that was quoted.  As in this example, the business is paying 1.80% plus 10 cents a transaction.


#3 Merchant Service Fees Section

Continuing with the review, the other section that you want to pick out is typically a section called Fees/Charges.  The section looks like the image below and is where a lot of surcharging or hidden fees are listed.


merchant service fees section


If we look at our page one, we know that we are getting charged 1.80% for MasterCard transactions.  However, as we look to this section, we see that there are additional fees such as 1.23%.  The 1.23% means that instead of paying 1.80% we’re actually paying 3.03% for that particular card type which is obviously not what was quoted or deemed from page one.  This section of the statement is the most important section from a cost review point of view.


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#4 Merchant Service Charges Section

One final or last section of the statement is the charges section.  The charges section is listed typically at the bottom of the Fees/Charges section of your statement.  The charges section of the merchant statement will typically show additional per-transaction costs, service fees, gateway fees, PCI fees or non PCI validation fees associated with your account.  One of the biggest things to pay attention to here is the per transaction fees.  As our example from above shows we are getting charged 10 cents per transaction, however as the example below shows, there are additional per transaction fees applied.


merchant service charges and fees section



#5 No Two Statements Are Alike

Unfortunately, every provider has their format of merchant service statement.  Sometimes even matching up two statements from the same provider can result in differences which makes things even more difficult. 

At Digital Financial Group we always advocate for getting multiple opinions, but better yet opinions from people who you know, like, and trust.  Sitting down with someone to review your statement and discuss together can make a world of difference.  Understanding the cards your customers are using and the costs associated with those cards can be eye-opening.  No matter who you go with, make sure your asking questions.  Asking questions and listening to the answers can provide you with a level of trust in how they answer them.  In the end, pay attention to what your gut is telling you.


If you still have questions or would like more information about reading merchant statements, feel free to reach out to us.  We provide honest, straightforward, unbiased, representation to save you hours of frustration and headaches.  To learn more about how Digital Financial Group can help you and your business, feel free to reach out to us at getaccount@dfgaz.com or call 623-764-7471.


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