By Justin Haag, founderOctober 6, 20264 min read

How to read your card processing statement in ten minutes

Most business owners have never calculated what card acceptance actually costs them. The number is on the statement; it is just never printed. Here is how to find it, and what to look for once you have.

Step one: your effective rate

Find two numbers on the summary page: total card sales for the month and total fees charged. Divide fees by sales. That is your effective rate, the only number that lets you compare one processor with another, because it includes every fee, not just the headline rate someone quoted you.

If your statement shows $45,000 in card sales and $1,480 in fees, your effective rate is 3.29%, which is about $17,760 a year. Our effective-rate calculator does the arithmetic for you.

Step two: the three costs inside every sale

Every card transaction carries three costs, and only one of them is negotiable.

• Interchange. Set by the card networks and paid to the bank that issued your customer's card. The schedule is the same for every processor. (American Express sets its own wholesale rate.)
• Network assessments. Set by the card networks and paid to them. Also the same everywhere.
• Processor markup. The only line your processor controls. On an interchange-plus statement it appears as its own number. On a flat-rate or "tiered" statement it is blended into the rate, which is why those statements are easier to read and usually harder to understand.

If your statement does not show these three separately, ask your processor to. If they can't, that tells you something.

Step three: the fees that shouldn't be there

Scan the fee section for line items that have nothing to do with a transaction. Common ones:

• PCI non-compliance fee. Charged monthly when you haven't completed an annual security questionnaire. It is usually avoidable in an afternoon.
• Statement or paper fee. A charge for producing the statement you are reading.
• Batch fee. A charge every time your terminal settles the day's sales.
• Annual or membership fee. Often billed in one month and easy to miss the other eleven.
• Equipment lease. A monthly charge for a terminal that would have cost a few hundred dollars to buy, continuing for years.
• Early termination fee. Not on the statement, but in the agreement. Know what it is before you shop.

Step four: what to ask

1. What is my effective rate, and what was it a year ago?
2. Show me interchange, assessments, and your markup as separate lines.
3. Which of these fees would go away if I asked?
4. What is my contract term and what does it cost to leave?

A processor that answers all four in writing is one you can work with. A processor that can't is telling you where the money goes.

General information, not financial advice. Fee names vary by processor; the categories above are the common ones.