How to Understand Your Card Provider’s Transaction Statements

Why Transaction Statements Matters

If you're considering switching payment providers, one of the first things you'll be asked for is a transaction statement or two. Since there’s no standard layout for these statements, they can vary widely from one provider to the next, making cost comparison a real challenge. Here at Merchant Advice Service, we recommend comparing statements on a pound-for-pound basis rather than just focusing on headline rates. In this guide, we’ll walk you through how to read your statements properly so that you can make informed decisions before switching providers.

How to Read Your Merchant Statement

To get the most out of your merchant statement, it’s essential to familiarise yourself with the terminology and formatting. While the layout might differ from provider to provider, most merchant statements contain key information like total sales volume and fees—once you know where to look.

This guide will help you break down these transactions, identify where they are located on your statement, and explain terms like ‘Retrieval Fees’ and more.

What is a Merchant Statement?

A merchant statement is a document provided by your payment processor, detailing all the card transactions during a specific period, typically a month. The statement includes everything from how many card payments were made to the various fees being charged.

The key elements of a merchant statement generally include:

• Transaction Summary
• Breakdown of Fees
• Monthly Charges and Adjustments
• Chargebacks and Refunds

Merchant statements are not only essential for keeping track of fees but also for ensuring the accuracy of your financial records. By carefully reviewing a statement, you can identify sales, fees, reversals, unauthorised charges, and other potential discrepancies.

How to Get Your Merchant Statement

Your merchant account provider will typically issue your statement every month. You can usually access it by logging into your account through the provider’s online portal, where the statements are often available as PDF files. Look for labels like 'Statements' or 'Reports'.

If you prefer a physical copy, you can contact customer service to request one by mail, or you may be able to receive it via email.

How to Read a Merchant Processing Statement

Each payment provider formats its merchant processing statement differently, using unique terminology. This can make comparison tricky, but once you understand the core components, it becomes much easier to navigate.

Types of Fees Listed

• Transaction Charges: These include fees for card processing, which consist of:
  • Interchange fees: Charged by the card issuer (e.g. Lloyds, HSBC) to cover costs associated with processing payments.
  • Card scheme fees: Paid to companies like Mastercard and Visa for using their networks.
  • Acquirer markup: A variable fee charged by your provider, which is what we aim to reduce for our clients.
• Authorisation Fee: This fee is charged each time your provider authorises a transaction with the customer’s bank.
• Monthly Fees:
  • POS Terminal fees: Charges for the physical devices used in stores.
  • Gateway Fees: These cover online payment systems and are usually listed by their brand names.
  • Portal Fee: Some providers charge for access to their dashboards, such as Worldpay's premium portal.
  • PCI DSS Service Fees: A compliance fee for maintaining card processing security standards.
  • PCI Non-Compliance Fee: Charged if your business doesn’t comply with PCI DSS.
  • Minimum Monthly Service Charge (MMSC): If your card transaction volume falls below a certain threshold, this fee may apply.
  • Paper Statement Fee: For those who request physical statements.
• Activity-Related Fees:
  • Non-secure transaction charge: Applied to higher-risk transactions, such as over-the-phone payments.
  • Card Not Present (CNP) Fees: Charged when a card isn’t physically present during a transaction, which increases the risk of fraud.
  • Chargeback Admin Fee: A fee charged when a customer disputes a transaction.
  • Retrieval Fees: Charged when transaction details need to be retrieved, often in response to a dispute.
• Chargebacks and Reversals:
  • Chargeback Scheme Fee: Covers the cost of managing chargeback disputes.
  • Refund Fee: Applied when refunding transactions.
• Other Fees:
  • Direct Debit Fee: Charged for setting up and managing direct debits.

Why It’s Important to Review Your Merchant Statement

Your merchant statement provides a detailed record of all card payments and fees. By reviewing it, you can:

• Ensure your bookkeeping is accurate.
• Spot unauthorised charges or unexpected fees.
• Compare your current fees with what was agreed upon.
• Identify opportunities to negotiate better rates or switch providers when the contract is up for renewal.

How to Read Merchant Processing Statements from Different Providers

Each payment provider structures its merchant statements slightly differently. Some may offer more detail than others, splitting out fees by card type or providing daily settlement summaries. Understanding these differences is crucial when trying to compare fees across providers.

How Pricing Models Affect Your Merchant Statement

The pricing model offered by your provider will determine how fees are displayed. In the UK, there are four main pricing models:

• Fixed or Flat Rate Pricing: A single fixed percentage charged for all card types, often the most expensive.
• Standard or Blended Pricing: Bundles all fees into one rate, which varies by card type.
• Interchange-Plus (IC+): Separates interchange fees from the provider’s markup, offering more transparency.
• Interchange Plus Plus (IC++): The most transparent model, breaking down all fees into their individual components.

How to Properly Read Your Merchant Statement

Simply glancing at your merchant statement isn’t enough—you need to set aside time to go through it thoroughly. Here’s a step-by-step approach to help you:

1. Review the Basic Details: Check the business information, merchant ID, and statement period.
2. Overview of Payment Processing: Examine your business’s total sales, fees, refunds, and chargebacks.
3. Identify Your Pricing Model: Understanding whether you’re on a flat rate or a more detailed pricing model can reveal where your money is going.
4. Monitor Account Activity: Keep tabs on chargebacks and the impact they may have on your business.