Read your merchant statement and find out the rates and fees you’re being charged “Where’s Waldo?” It can be like playing. One reason is that there are almost as many different statement formats as there are companies doing merchant acquisitions. Also, due to how competitive the industry has become, many monthly statements do not fully disclose the rates charged. And sometimes they are completely hidden.
I know of banks that don’t even send a statement. If a merchant wants the details of the amount paid by him, he has to log in to an online account to find it.
It’s war out there!
One reason for this is competitiveness. You have to remember that credit and debit cards are part of a $2 trillion industry. Money is like a magnet – it attracts. Most merchants are constantly being approached by competing processors trying to switch processors by promising “lower rates”, etc.
Therefore, to prevent another processing company’s sales agent from driving a merchant away – some processors make it possible for a competitor’s sales representative to come into the business, analyze merchant statements and do ‘apples to apples’ They make it that much more difficult. Compare.
That being said, there are still some basic keys to look for when reading your statement. Here’s what I look for in parsing a merchant statement:
- One: pricing structure – How is the account set up? What pricing model does it employ? Is it using tiers (eg 3-tier; 4-tier, etc.) or – is it using “interchange plus”? (Note: Most merchants are on a tiered pricing model, which in my opinion guarantees they are being charged more. Also, there are other pricing structures but tiered pricing is by far the most common)
- Two: Monthly fee (sometimes called “other”) – Next, I want to see what the monthly fee is. This may include: a statement fee; monthly service fee; account maintenance fees (usually, you’ll only see one of these, though I’ve seen two – or, you may see an equivalent fee but using a different term); PCI fee; batch fee; and gateway or access fees. Any miscellaneous, but not monthly, fees may also appear here—for example, annual fees or semi-quarterly.
- Three: processing fees – This is where the discount rates will be listed. If you are on tier pricing Best Detail will print an itemized list showing the “Eligible”, “Mid-Eligible”, and “Non-Eligible” (3 tier) rates. If you’re on Interchange Plus, you’ll see a list of all the different cards you have, followed by the actual interchange rate for the card, the “DPI” (discount per item), as well as the processor mark expressed as base -up points and a transaction fee (or per item, depending on the term used to list it).
- Four: authorization fee Here you will find the fees going to Visa and MC. They will appear listed as Access, Authorization, and/or Watts charges. You can also find AVS Fees (Address Verification) here; assessment fee; brand usage fee; risk fee; Settlement fee, IAS fee (Issuer Access and Settlement).
- five: third party fees – Third parties means networks other than Visa and MC that are included in your details. If you are using PIN Debit this would include American Express, Discover and Debit networks
Part of the problem with reading merchant statements is that different processors use different category names and different wording to identify charges. So I started off by saying that this “Where’s Waldo?” While general terms are used for some fees, a wide variation is also used depending on the acquirer (the company with whom you have signed a merchant agreement).
Again, part of this is due to an attempt to hide what is being alleged and make it difficult for a competitor to analyze a statement. While this makes sense ‘to some extent’ – in my opinion it does the trader a disservice. honesty demanded transparency, Maybe if processors were more merchant-oriented, their turnover would be lower and they wouldn’t have to worry so much about competition. At least that’s my opinion.