How to Read a Credit Card Processing Statement

A credit card processing statement is a detailed monthly record provided by a payment processor. This document outlines a business’s transactions, sales activity, and all associated fees for processing credit and debit card payments. It acts as a comprehensive financial summary, reflecting the movement of funds from customer transactions to a merchant’s bank account. Understanding this statement is important for businesses to monitor their financial health, track revenue, and ensure accurate record-keeping of payment processing costs.

Understanding Statement Layout and Key Information

Credit card processing statements follow a structured layout, beginning with essential identifying information. At the top, merchants generally find their business name, unique merchant identification (ID) number, and the specific statement period, such as “January 1 – January 31.” This merchant ID is a unique identifier within the processor’s system, useful for quick account lookups when contacting support.

Statements feature summary sections that offer a quick overview of processing activity. These summaries include total sales processed, total refunds issued, and net processing volume after returns. They also display the total fees deducted, providing a snapshot of overall costs.

A distinction is made between gross and net settlement figures. Gross settlement refers to the total transaction amount deposited before any fees are subtracted. Net settlement means processing fees are deducted before the remaining funds are deposited. While gross settlement offers clarity on total sales, net settlement provides an immediate view of actual funds received.

The statement also details the final deposit or payout amount transferred to the merchant’s bank account. This figure reflects the net funds after all fees and adjustments. Common terms present include:
Batch: A group of transactions submitted for processing.
Authorization: A real-time approval of a transaction.
Settlement: The daily process of submitting transactions for funding.
Retrieval request: A formal request for transaction information, often preceding a chargeback.

Deciphering Transaction Summaries

Credit card processing statements provide detailed breakdowns of individual transactions or categories. This section allows merchants to review their sales activity. Transactions are typically categorized and grouped by date, batch, or card type.

Categories of transactions found on a statement include:
Sales: Represents the gross volume and number of successful transactions.
Refunds (credits): Details the total value and count of transactions where money was returned to the customer.
Voids: Cancel a transaction before it has been fully settled, preventing the charge from appearing on the customer’s statement and avoiding associated interchange fees.
Chargebacks: Occur when a customer disputes a transaction with their card-issuing bank, indicating the disputed amount, reason code, and any associated fees.
Adjustments: May appear for reasons such as re-presentments or corrections to interchange fees.

Statements differentiate between transaction volume (total number of transactions) and transaction value (total dollar amount processed). This distinction helps analyze transaction patterns and average ticket sizes. Different card brands, such as Visa, Mastercard, Discover, and American Express, might be reported separately or collectively, depending on the processor’s format.

Breaking Down Processing Charges

Understanding processing charges is fundamental to managing the cost of accepting card payments. These fees are composed of three primary components: interchange fees, assessment fees, and processor markup fees. Identifying each helps in understanding the true cost of processing.

Interchange Fees

Interchange fees are paid by the merchant’s acquiring bank to the cardholder’s issuing bank. These fees compensate the issuing bank for costs and risks associated with approving transactions and providing card services. Interchange rates are set by card networks like Visa and Mastercard and vary based on factors such as card type, transaction type, and merchant industry. They typically represent the largest portion of processing costs, often around 70% to 90% of total fees, and usually consist of a percentage of the transaction value plus a small fixed fee, with an average around 2% of the transaction value for credit cards in the U.S.

Assessment Fees

Assessment fees are charged by card networks (e.g., Visa, Mastercard, Discover, American Express) for the use of their payment networks. These non-negotiable fees cover operational costs and are typically a small percentage of the total processing volume, often ranging from 0.11% to 0.25%.

Processor Markup Fees

Processor markup fees are the charges imposed by the merchant service provider for their services. These fees are how the processor generates revenue and can vary significantly between providers. Common types of processor fees include:
Per-transaction fees: A flat fee per transaction or per batch.
Monthly fees: Such as statement fees, gateway fees for online transactions, PCI compliance fees, or customer service fees.
Annual fees.
Chargeback fees: Typically ranging from $10 to $100 per instance, incurred when a customer disputes a transaction.

Pricing Models

Different pricing models affect how these fees are presented.
Interchange-plus pricing: Merchants see actual interchange and assessment fees passed through, with the processor adding a separate, transparent markup.
Tiered pricing: Categorizes transactions into “qualified,” “mid-qualified,” and “non-qualified” tiers, each with a different rate, which can make it difficult to predict costs.
Flat-rate pricing: Charges a single, fixed percentage plus a per-transaction fee for all transactions, regardless of card type or transaction method, bundling all underlying costs. While seemingly simple, flat-rate pricing can be more expensive for businesses with high volumes of lower-cost transactions.

Debit card transactions generally incur lower interchange fees than credit card transactions due to reduced risk, and some statements may show these broken out separately.

Identifying and Addressing Discrepancies

Regularly reviewing a credit card processing statement ensures accuracy and helps manage costs. The process involves reconciling the statement with internal sales records, such as point-of-sale (POS) system reports or accounting software. This reconciliation confirms that all processed transactions align with business records.

Key figures to compare include:
Total sales volume and transaction count from the statement against internal reports.
Total refund volume and count.
Net deposit amount received in the bank account against the final payout figure on the statement.
Individual fee charges against agreed-upon processing rates.

Common red flags or discrepancies to look for include:
Unexpectedly high fees that do not align with historical averages or agreed rates.
Unexplained charges or fees not covered in the merchant agreement.
A mismatch between processing statement totals and internal sales records.
Incorrect or unexpected pricing tiers.

When a discrepancy is identified, several steps should be taken:
Gather all relevant documentation, including the processing statement, internal sales reports, and the original merchant service agreement.
Contact the credit card processor’s customer support.
Be prepared to provide specific details of the discrepancy, including transaction dates, amounts, and the exact fees in question.
Document all communications, including dates, times, names of representatives, and summaries of discussions.

Consistent, thorough review of statements helps catch issues early, preventing small errors from accumulating into significant financial impacts.