Hey there, business owners! Are you confused by your monthly merchant statement? Don’t worry—you’re not alone! Many business owners struggle to understand those pages filled with fees, percentages, and processing details. But today, we’re going to break it down so you can know exactly what you’re paying for and—most importantly—how to spot hidden fees that could be costing you big money!
First things first—your merchant statement typically has four key sections:
- Summary of Charges – This gives you an overview of your total processing volume and fees.
- Transaction Details – This section lists every sale, refund, and chargeback processed during the period.
- Breakdown of Fees – Here’s where you see individual charges like interchange fees, assessment fees, and processing markups. Interchange changes are set in stone for all processors and are non-negotiable. They comprise the wholesale rates and fees that the issuing bank charges to advance credit to the consumer. Assessments are the fees that Visa/MC/Discover/Amex charge. Assessments are also non-negotiable. Only the processor’s mark up fees are negotiable. They are sometimes called service fees.
- Other Fees & Adjustments – Here is where to look out for additional monthly fees like statement fees, PCI compliance fees, batch fees, annual fees, or even extra “BS” fees.
Now, let’s talk about some common hidden trick fees you should be aware of!
- Tiered Pricing Tricks – If you see terms like “Non-Qualified” or “Mid-Qualified,” you might be paying higher rates than necessary. This is how a processor bundles together interchange and their markup so that you don’t really know how much their mark up is.
- Flat Rate Pricing – Companies like Square, PayPal and Stripe charge a flat rate and flat transaction fee. They have bundled all the fees into what looks like a simple formula. However, flat rates also mask the markup.
- PCI Non-Compliance Fees – If you’re getting hit with this, you may need to complete a simple PCI compliance questionnaire to get rid of them.
Interchange + Pricing offers the best pricing for merchants. The interchange and assessments are clearly recorded as well as the mark up.
Presenter: So, what can you do? First, review your statement every month.
Second, compare your rates with YOUR industry standards, not with a small business owner in another industry. Restaurants get lots of low-rate debit cards. Wholesale supply companies get lots of high-rate corporate cards. The wholesale interchange rates are drastically different. Likewise, if you are a fast food business, a fine dining restaurant is a completely different industry with higher average tickets and again, many more high rate corporate cards. It does not good to compare merchant services fees with another industry.
And third—ask for some help! Reading and understanding a merchant statement can be like trying to understand Elon Musk’s tax return. Send us a merchant statement at Electronic Money Company, and we will send you an easy-to-understand, FREE analysis and go over it with you until you understand. No strings attached! No pressure to switch to us! We are all about educating merchants as you can see from our YouTube channel and blog. If we can help you, great! But if we can’t, we will be the first to tell you to stick with your current processor.
Give us a call at 505-296-2847. Let’s make sure you’re not overpaying for payment processing!
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