Processing statements are hard to read because they are designed to be. Different processors use different layouts, but every statement has the same four parts once you know where to look: volume, interchange, markup and fees. Here is how to find each one and what to do with it.
Step 1: Find the two totals
Somewhere on page one or two is total card volume (sales) for the month, and total fees. Some statements bury fees across several sections: “processing fees,” “other fees,” “monthly fees,” “gateway fees.” Add all of them.
Effective rate = total fees ÷ total volume.
Example: $2,140 in fees on $61,000 in volume is 3.5%. That single number is what you compare across providers, because it includes every percentage, per-item and monthly charge.
Benchmarks for a small business taking cards in person:
| Effective rate | What it usually means |
|---|---|
| Under 2.0% | Interchange-plus with a low markup, or a low-cost card mix. Good. |
| 2.0% to 2.5% | Fair traditional pricing. |
| 2.5% to 3.0% | Flat-rate (Square, Stripe, Clover direct) or a mediocre interchange-plus deal. |
| 3.0% to 4.0% | Tiered pricing or a flat rate plus junk fees. Overpaying. |
| 0% | Dual pricing. The card price funds the cost. |
Card-not-present businesses (ecommerce, invoicing, phone orders) run about 0.4% to 0.6% higher at every tier because interchange is higher.
Step 2: Separate interchange from everything else
Interchange is what Visa, Mastercard, Discover and Amex charge for each card type. A basic debit card might be 0.05% + 22¢. A premium rewards credit card might be 2.3% + 10¢. A corporate card might be 2.65% + 10¢. These rates are the same for every processor in the country. Card-brand assessments (about 0.13% to 0.14%) sit alongside them and are also fixed.
On an interchange-plus statement, interchange is itemized by card type and the processor’s markup is listed separately, often as “discount rate” or “processing fee” with a percentage and a per-item amount. Add the markup lines and divide by volume to get the markup rate. A good markup is 0.20% to 0.40% plus 5¢ to 10¢ per item.
On a tiered statement you will see “qualified,” “mid-qualified” and “non-qualified” rates, and no interchange detail. The processor has bundled its margin into the tier rates. You cannot see the markup. That is the point of tiered pricing.
On a flat-rate statement (2.6% + 10¢, 2.9% + 30¢) there is one rate. The processor’s margin is the difference between the flat rate and the actual interchange on your card mix, which you also cannot see.
Step 3: Find the fees that should not be there
Go line by line through the fee section. The ones below are pure margin, and every one of them is negotiable or avoidable:
| Fee | Typical amount | Notes |
|---|---|---|
| PCI non-compliance | $20 to $99 a month | Complete the questionnaire and it goes away. Ask why nobody told you. |
| PCI compliance or “security” | $5 to $30 a month | Charged even when compliant. Margin. |
| Annual, membership, “account maintenance” | $99 to $199 a year | Often billed in a slow month. |
| Statement, paper statement, online access | $5 to $15 a month | For the privilege of seeing your bill. |
| Batch, settlement | 10¢ to 35¢ per day | Small; adds $3 to $10 a month. |
| Regulatory, compliance, “IRS reporting” | $3 to $10 a month | Refers to a 1099-K the processor is required to file anyway. |
| Gateway | $10 to $30 a month | Legitimate if you use a gateway, but check you are not paying two. |
| Equipment lease | $30 to $90 a month | The most expensive line on any statement. Usually 48 months, non-cancellable. |
| Minimum monthly fee | $25 | Charged when your fees fall below the minimum. Hits seasonal businesses. |
| Early termination | $295 to $595 | Appears when you leave. Know it before you do. |
Step 4: Read the footer
Rate increases are disclosed by notice on the statement, usually in the last page’s fine print: “Effective [date], your discount rate will increase by 0.25%.” Silence is consent. Read the footer every month. Then compare this month’s effective rate with the same month last year. If it went up and your card mix did not change, you have found the increase.
Step 5: Decide
- Effective rate under 2.3%, few junk fees, no lease: keep it. Complete the PCI questionnaire if you are paying the non-compliance fee.
- Effective rate above 2.5% on tiered or flat-rate pricing: ask for interchange-plus from your current provider, or get a quote. The savings are usually 0.5% to 1.2% of volume.
- Any effective rate, and you take cards in person: consider dual pricing, which moves the cost to the card price and takes your effective rate to zero. How it compares to surcharging is in dual pricing vs surcharging vs cash discount.
- Equipment lease on the statement: find out the payoff and the end date. It is often cheaper to buy out the lease and take free placement than to keep paying.
A worked example
Restaurant, $61,000 in monthly volume, 1,600 transactions, tiered pricing.
| Line | Amount |
|---|---|
| Qualified sales at 1.69% | $310 (on $18,300) |
| Mid-qualified at 2.49% | $610 (on $24,500) |
| Non-qualified at 3.39% | $617 (on $18,200) |
| Per-item fees, 1,600 x 12¢ | $192 |
| PCI non-compliance | $49 |
| Statement, batch, regulatory | $31 |
| Equipment lease | $79 |
| Total fees | $1,888 |
| Effective rate | 3.09% |
The “1.69%” that sold the account applies to less than a third of volume. Under interchange-plus at 0.25% + 8¢ the same month would run about $1,420 (2.33%) with the lease and junk removed. Under dual pricing the merchant’s cost would be the software fee and nothing else.
Ten minutes with a calculator, or text us the pages and we do it.