Reading your business account statement and finding the rates and fees 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 acquiring companies. Additionally, 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 he paid for, he 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 Pulls Most merchants are continually approached by competing processors trying to get them to switch processors, promising “lower rates” etc.
Therefore, to prevent a merchant from being taken away by a sales agent from another processing company, some processors make it as difficult as possible for a competitor’s sales representative to enter a business, review a merchant statement, and do an “apples for apples” comparison.
With that said, there are still some basic clues to look for when reading your statement. Here’s what I look for when analyzing a merchant’s statement, in order:
- One: The pricing structure – How has the account been set up? What pricing model do you use? Are you using tiers (eg 3-tier, 4-tier, etc.) or are you using “Interchange Plus”? (NOTE: Most merchants use a tiered pricing model, which in my opinion ensures that they are overcharged. Also, there are other pricing structures out there, but tiered pricing is by far the best. 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 have seen two, or you can see the equivalent fee but using a different term); PCI fee; lot fee; and gateway or access fees. Any miscellaneous fees, 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 returns will print an itemized list showing the “qualified”, “medium qualified” and “unqualified” rate (all 3 levels). If you’re on Interchange Plus, you’ll see a list showing all the different cards you took, followed by the card’s actual interchange rate, the “dpi” (discount per item), plus the processors markup expressed as a base 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 such as access fees, authorization and/or WATTS will appear. 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 Party means networks other than VISA and MC that are listed on your statement. This would include American Express, Discover and 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. That’s why I started by saying that it can be like playing “Where’s Wally?” While common terms are used for certain fees, 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 hide what is being charged and make it more difficult for a competitor to analyze a claim. While that is understandable ‘somewhat’, it is a disservice to the trader in my opinion. Integrity requirements transparency. Maybe if processors were more merchant oriented, they would have lower billing and not have to worry as much about competition. At least that’s my opinion.
