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Reading Your Processor Statement

Most merchants pay more than they should because they don't understand their statement. 10 minutes a month can save you thousands a year.

The Lazy Route

If you only have 10 minutes this month:

  1. Calculate your effective rate
  2. Scan for any new fee names
  3. Check that your chargeback count matches your own records

Effective Rate: The Only Number That Matters​

Forget the quoted rate. Calculate what you actually pay:

Effective Rate = Total Fees / Total Volume × 100

Example:

  • Total volume: $87,432
  • Total fees: $2,535
  • Effective rate: 2.90%

Your processor quoted 2.4% + $0.30? That's the base rate. After interchange pass-through, assessments, and fees, you're at 2.90%. This is normal.

Effective Rate Benchmarks​

Business TypeTypical Effective Rate
In-person (chip/tap)1.8% - 2.3%
Standard ecommerce2.5% - 3.2%
High-risk ecommerce3.0% - 4.5%
B2B (Level 2/3 data)2.0% - 2.7%
Subscription/recurring2.4% - 3.0%
International cards+0.5% - 1.5% additional

If you're new or doing very low volume, your effective rate will bounce around a lot. Focus on whether it's trending down once you're above $20K/month.

Anatomy of a Statement​

Volume Summary​

  • Gross volume: Total transactions processed
  • Net volume: After refunds and chargebacks
  • Transaction count: Number of transactions
  • Average ticket: Volume / count

Watch for: Average ticket changes (could indicate fraud or product mix shift)

Fee Breakdown​

Fees come in layers:

Interchange (non-negotiable):

  • Set by Visa/Mastercard
  • Varies by card type, transaction type, industry
  • Passed through to you (in interchange-plus pricing)

Assessments (non-negotiable):

  • Network fees from Visa/Mastercard
  • Typically 0.13% - 0.15%

Processor markup (negotiable):

  • This is where your processor makes money
  • Could be basis points, per-transaction, or both
  • This is what you negotiate

Other fees (sometimes negotiable):

  • Monthly/annual fees
  • PCI compliance fees
  • Statement fees
  • Batch fees
  • Chargeback fees

Chargeback Section​

  • Count: Number of chargebacks this period
  • Amount: Dollar value of chargebacks
  • Fees: Per-chargeback fees (typically $15-25)

Check this against your own records. If the statement shows 12 chargebacks and you only handled 8, investigate. Either you missed some or there's an error.

Red Flag Checklist​

Scan each statement for:

  • New fee names you've never seen before
  • Rate increases without notification
  • PCI non-compliance fees (should be $0 if you're compliant)
  • Excessive batch fees (some processors charge per batch, per day)
  • Chargeback count mismatch with your records
  • Effective rate creep (trending up month over month)
  • Minimum fees triggered (if volume dropped below minimums)

New Fee Names to Watch For​

Fee NameWhat It MeansNegotiable?
Network Access FeeVisa/MC fee pass-throughNo
Fixed Acquirer Network Fee (FANF)Visa feeNo
PCI Non-ComplianceYou haven't done PCI SAQYes (complete SAQ)
Regulatory FeeCatch-all for new network feesMaybe
Risk Monitoring FeeThey're nervous about youUsually no

Sample Statement Walkthrough​

Summary:

Processing Volume:     $87,432.00
Transaction Count:          1,247
Refunds:                 $2,103.00
Chargebacks:               $412.00
Net Volume:            $84,917.00

Fee Detail:

Interchange Fees:      $1,842.22
Assessment Fees:         $113.66
Processing Fee:          $412.32
Monthly Fee:              $25.00
PCI Fee:                  $19.99
Chargeback Fees:          $45.00
--------------------------------
Total Fees:           $2,458.19

Calculation:

  • Effective rate: $2,458.19 / $87,432.00 = 2.81%
  • Interchange as % of total fees: 75% (normal)
  • Processor markup: ~0.5% + per-transaction

Red flags in this example:

  • Chargeback fees at $45 suggest 2-3 chargebacks (at $15-25 each)
  • But chargeback amount is $412, which could be 1-4 transactions
  • Worth verifying the count matches your records

Pricing Models​

Interchange-Plus (Best for Most)​

You pay interchange (cost) + fixed markup.

Pros: Transparent, you see exactly what each card type costs Cons: Statements are complex, harder to predict monthly cost

Tiered/Bundled (Avoid If Possible)​

Transactions are grouped into "qualified," "mid-qualified," "non-qualified" tiers.

Pros: Simple statement Cons: You have no idea what you're actually paying, most transactions end up in expensive tiers

The trap: "Qualified rate" of 1.69% sounds great until you realize only 20% of transactions qualify.

Flat Rate (Fine for Small Volume)​

One rate for everything (e.g., 2.9% + $0.30).

Pros: Simple, predictable Cons: You overpay on cheap interchange cards, underpay on expensive ones

Good for: Under $50K/month, simple product mix

B2B and Level 2/3 Data​

If you sell to businesses, you're leaving money on the table without Level 2/3 data.

Level 2 data: Tax amount, customer code, merchant postal code Level 3 data: Line-item detail (item descriptions, quantities, prices)

Impact: Can reduce interchange by 0.5% - 1.0% on B2B transactions

If your statement doesn't show Level 2/3 categories, ask your processor what it would take to qualify. Many processors can enable this with minimal technical work.

When to Renegotiate​

Triggers for a pricing conversation:

  • 6+ months of clean history (low chargebacks)
  • Volume increased significantly since you signed
  • Effective rate trending up
  • You've gotten competitive quotes

See Processor Management for negotiation tactics.

Effective Rate Tracking Experiment

Calculate your effective rate monthly for 6 months and plot it.

What you're looking for:

  • Is it stable? Good.
  • Is it trending down as you grow? Expected and good.
  • Is it trending up? Time for a conversation with your processor.
  • Is it bouncing around? Normal at low volume, should stabilize above $20K/month.

If you're above $50K/month and your effective rate hasn't dropped in 6 months, you have negotiating power you're not using.

Where This Breaks​

Mid-month rate changes: Some fee changes take effect mid-statement period, making month-over-month comparison messy.

Amex and Discover fees: These networks price differently. Don't average them with Visa/MC.

Delayed chargebacks: A chargeback on a January transaction might appear on your March statement. This is normal but makes tracking harder.

Refund interchange: You don't get interchange back on refunds with most processors. A refunded transaction still cost you money.

Next Steps​

Quick monthly review?

  1. Calculate effective rate - Total fees / total volume
  2. Scan for new fee names - Any surprises?
  3. Verify chargeback count - Matches your records?

Understanding your costs?

  1. Walk through fee breakdown - Interchange, assessments, markup
  2. Compare to benchmarks - Where do you stand?
  3. Identify pricing model - Interchange-plus vs tiered

Time to renegotiate?

  1. Check renegotiation triggers - Clean history, volume growth
  2. Track effective rate trend - 6 months of data
  3. Follow negotiation tactics - Know your numbers