How to decode your merchant payment processing statement

How to decode your merchant payment processing statement

You don't need a master's degree in statistical analysis to decipher your merchant payment processing statement -- it just seems that way.

That said, it may be easier to crack the Da Vinci code than the merchant statement code, which uses language that only a bureaucrat could love. Here are just a few examples of the terms you'll see:

• Interchange charges.
• Chargebacks.
• Credit adjustments.
• Third-party transactions.
• AVS transaction fees.

The merchant card payment fee structure is so complicated, and affects retailers and consumers in so many ways, that Congress has finally stepped in to streamline key segments of the card interchange fee market.

But until Congress simplifies things, what's a retailer to do in the meantime? For starters, take control of your payment processing statements by knowing what's in them -- and how each provision might affect your bottom line.

Let's accomplish exactly that with a breakdown of an average payment processing statement. It's not easy -- every payment processing provider has a unique statement layout structure -- but it is doable:

Card deposit summary: In most instances, the first item a merchant will see in a statement is the card deposit summary. The phrasing may be tweaked (it's also known as a "fund summary"); but by and large, this is the opening to most statements. The section will include a laundry list of statement data, most notably:

• The amount of transactions incurred during the previous month.
• The dollar amount of those transactions.
• What credit cards were used.
• Any discount or coupon charges (a big deal in the age of Groupon.com and other "daily deal" sites).

Normally, you'll see deposit information broken down into individual daily line items, but some payment processors may combine all that payment data into one section.

Credit card fee summaries: Next, you'll see some variation of how much the credit card issuer charged per transaction (this is usually called the "Summary of Card Fees"). The payment processor may likely refer to fees being charged for "qualified transactions." This section should include any fees, discounts and rates applied to transactions made through your merchant account. The payment processor should provide a complete list of card fee categories in this section, a listing for gross sales amounts (per credit card) and any fees and discounts applied to specific card transactions.

Transaction fees: This is basically an extension of the previous section, listing each fee related to card transactions in dollar amounts. The terminology gets convoluted in this section, as there is no shortage of card fee categories. Safe to say, if you see terms like "chargebacks," "batch header fees" and "ACH return fees," they'll appear in this section as part of your monthly card payment fees.

Most statements will add all the statement fees together (primarily including the surcharge fees, discount fees and transaction fees) to give you a complete and total payment processing charge amount for the month. To confirm that the list of total monthly charges is accurate, add all the fees yourself. When both lists match, you have your total credit card processing charges for the month -- complete and up to date.

At first glance, payment processing statements seem to be overly complicated and almost intentionally confusing. But just an hour or so a month studying the statements can bring you up to speed and can be a great tool in showing you how merchant processing charges are tabulated. If you run into any questions, call your merchant account provider right away and straighten the matter out.

After all, no retailer likes surprises -- especially on the financial side of the business. If you can learn to master your payment processing statements, such surprises should become a thing of the past.

See related: Video: How does credit card processing really work?; 10 things you must know about merchant account fees 

Published: May 24,2023