Reading your business statement and finding the fees and charges you are charged can be like playing “Where’s Waldo?” One reason is that there are almost as many different statement formats as there are commercial acquirers. Also, due to how competitive the industry has become, many monthly statements do not fully disclose the fees charged. And sometimes they are completely hidden.
I know of banks that don’t even send a statement. If a merchant wants details of what they paid, they must log into an online account to find it.
It’s war out there!
One of the reasons for this is competitiveness. Remember that credit and debit cards are part of a 2 trillion dollar industry. Money is like a magnet: it attracts Most merchants are continually contacted by competing processors trying to get them to switch processors, promising “lower fees” and so on.
Therefore, to prevent a sales agent from another processing company from taking a merchant, some processors make it as difficult as possible for a competitor’s sales representative to enter a business, analyze a merchant statement, and make an “apples by apples”. comparison.
With that said, there are still some basic clues to look for when reading your statement. This is what I look for when analyzing a merchant’s statement, in order:
- A: The pricing structure – How has the account been set up? What pricing model do you use? Are you using a third party (eg 3 levels, 4 levels, etc.) or are you using “Interchange Plus”? (NOTE: Most traders use a tiered pricing model, which in my opinion ensures that they are overcharged. Also, there are other pricing structures, but tiered pricing is by far the same. more common)
- Two: Monthly fees (sometimes called “Other”) – then I look to see what the monthly fees are. This may include: a statement fee; monthly service fee; account maintenance fee (normally, you would only see one of these, although I’ve seen two, or you can see the equivalent fee but using a different term); PCI fee; batch fee; and gateway or access fees. Any miscellaneous fee, but not monthly, can also appear here, for example an annual or semi-annual fee.
- Three: Processing fees – this is where the discount rates will be listed. If you have a tier price, the best statements will print a detailed list showing the “qualified”, “moderately qualified” and “unqualified” rate (all 3 tiers). If you are on Interchange Plus, you will see a list showing all the different cards you took, followed by the actual exchange rate of the card, the “dpi” (discount per item), plus the processor markup expressed as a basis. points and a transaction fee (or per item, depending on the term used to list it).
- Oven: Authorization fees – this is where you will find the fees that go to VISA and MC. Listings will appear as access, authorization and / or WATTS fees. You can also find AVS (address verification) rates here; evaluation fees; trademark usage fee; risk commission; settlement fees, IAS fee (issuer access and settlement).
- Five: Third party fees – Third parties means networks other than VISA and MC that are included in your account statement. This would include American Express, Discover, and the debit networks if you are using PIN debit
Part of the problem with reading a business statement is that different processors use different category names and different terms to identify charges. So I started by saying that it can be like playing “Where’s Wally?” While common terms are used for certain rates, a wide variation is also used, depending on the acquirer (the company with whom you entered into a business agreement).
Again, part of this is due to an attempt to conceal what is charged and make it difficult for a competitor to analyze a statement. While that is understandable ‘something’, in my opinion it is a detriment to the merchant. Integrity requirements transparency. Perhaps if processors were more merchant-oriented, they would have lower turnover and would not have to worry as much about competition. At least that’s my opinion.
