What Are Merchant Statements? A Breakdown For Your Business

A merchant statement is a monthly document provided to businesses that accept credit and debit card payments. Issued by a payment processor or acquiring bank, it details all card payment activity, associated fees, and net deposits for a specific period, usually a calendar month. This statement serves as a record of financial interactions related to card processing, offering transparency into the costs and transactions. It provides a breakdown of processed funds, deducted fees, and the final amount deposited into the business’s account.

Understanding the Key Sections of a Merchant Statement

A merchant statement organizes financial data into several distinct sections, each outlining payment processing activity.

Account Summary

This section displays essential identifying information such as the merchant identification number and the specific statement period. It also summarizes key figures, including the total processing volume for the period, which represents the gross amount of all card transactions.

Transaction Activity

This section provides a breakdown of all card-related movements. It itemizes sales, refunds, and voided transactions, often distinguishing between card-present and card-not-present transactions. This section also lists the total number of transactions processed and any adjustments made.

Processing Fees

This section lists the various charges deducted from the total processing volume. It provides a consolidated view of all costs incurred.

Chargebacks and Other Adjustments

This section details any disputes initiated by cardholders. A chargeback occurs when a customer disputes a transaction with their issuing bank, leading to the reversal of funds. This section shows the amount of each chargeback, along with any associated fees or credits. Other adjustments might include debits or credits for reconciliation discrepancies.

Deposits and Settlements

This section provides a reconciliation of processed funds with the actual amounts transferred to the merchant’s bank account. It outlines total gross sales, subtracts all fees and chargebacks, and then shows the net amount deposited into the business’s checking account.

Batch Information

This section details the daily or periodic groupings of transactions. Merchants “batch out” their credit card terminal or point-of-sale system at the end of each business day, sending all processed transactions to the payment processor. This section confirms the transmission and processing of these daily batches, showing the total amount and number of transactions within each batch.

Decoding Common Merchant Statement Fees

Merchant statements itemize numerous fees, each representing a distinct cost component of accepting card payments.

Interchange Fees

These are a significant portion of these costs, representing a passthrough expense paid to the cardholder’s issuing bank for each transaction. These fees are set by the card networks, such as Visa, Mastercard, and Discover, and vary based on factors like transaction type, card type (e.g., rewards, debit), and how the card was processed (e.g., swiped, online).

Assessment Fees

These are charges levied by the card networks themselves, distinct from interchange fees. They are a small percentage of the total transaction volume, covering the operational costs of the card networks, including maintaining payment infrastructure and managing fraud prevention.

Processor Markups

Also known as discount rates, these represent the payment processor’s own charges for their services. This fee is added on top of interchange and assessment fees. It can be structured in various ways, such as a percentage of the transaction volume, a flat per-transaction fee, or a combination. This markup covers the processor’s costs for providing the payment gateway, customer service, and other value-added services.

Monthly Fees

These cover administrative or access charges. They can include a statement fee for producing the monthly report, gateway fees for using an online payment gateway that facilitates card-not-present transactions, and PCI compliance fees for adhering to data security standards.

Per-Transaction Fees

These are fixed charges applied to each individual transaction, regardless of its dollar amount. These fees cover the costs associated with processing each payment request and are separate from percentage-based fees.

Chargeback Fees

These fees are incurred when a cardholder disputes a transaction and the payment processor handles the dispute process. They are administrative costs for managing the investigation and resolution of the dispute.

Other Fees

Miscellaneous fees can include batch fees for settling each daily batch of transactions. Annual fees might also be present, covering various services or account maintenance.

Reviewing and Utilizing Your Merchant Statement

Regularly reviewing your merchant statement is a fundamental practice for effective financial management and cost control. This consistent review allows businesses to monitor their processing costs, identify any unexpected increases, and detect potential errors or unauthorized charges. It serves as a verification tool, ensuring that the fees deducted align with the agreed-upon rates and that all transactions are accurately reflected.

To identify discrepancies or unauthorized charges, businesses should compare the data on their merchant statement against their internal sales records and point-of-sale (POS) system reports. This involves cross-referencing total sales volumes, the number of transactions, and the amounts of refunds and voids. Any significant deviations in processing fees from month to month, without a corresponding change in sales volume, also warrant investigation.

If an error or an unexpected charge is discovered, contact the payment processor’s customer support. Businesses should gather all supporting documentation, including their internal sales records, daily batch reports, and the specific merchant statement in question, before making contact. Clearly identifying the discrepancy, providing dates and transaction amounts, and referencing the relevant section of the statement will facilitate a quicker resolution.

Beyond error detection, the merchant statement is a valuable tool for financial planning and analysis. By tracking trends in processing costs over several months, businesses can gain insights into the true expense of accepting card payments. This data can inform pricing strategies and help in budgeting for operational costs. Analyzing transaction volumes and types can also identify peak sales periods or highlight areas where different payment methods are preferred, aiding in strategic business decisions.