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For many businesses, credit card processing represents their fourth biggest expense behind payroll, rent, and cost of goods sold. But understanding where those fees are coming from can be confusing. A good place to start is with your processing statement, but if you’re not sure how to read one, it can prompt more questions than answers.

Fortunately, once you understand the basics of reading a statement, it’s pretty easy to figure out where your fees are coming from and identify any errors that need looking into. Below is a guide to understanding a basic credit card processing statement based on the ones Gravity provides to its merchants. Yours may look a little different, but it should contain the same basic information. If you have questions–even if you’re not a Gravity client–please reach out to us at 866-701-4700 and we’ll be happy to help. 

The main components of a credit card statement

  • Business information and merchant ID number: The name and address of your business will appear at the top of your statement, as will your merchant ID number. This represents how your business shows up in your processor’s system. When reaching out to your processor with questions, it can be helpful to have your merchant ID handy so they can look up your account quickly.
  • Summary: This is a quick overview of the amount of credit card revenue processed and your monthly processing fees. It’s a great snapshot, but it doesn’t provide a lot of data.
  • Important information about your account: This box is where your processor will let you know of any upcoming changes to your fees or account. For example, every six months, the major card brands change their fees, so we will notify you of those upcoming changes here. Gravity will never change its fees to you without notifying you first, so this box is primarily used for other types of notifications.
  • Summary by card type: This section breaks down all of the different card brands used and how many transactions and how much volume was processed for each card type. You’ll notice two numbers here: total gross sales and total amount you submitted. Total gross sales represents the full amount processed in credit card sales that month. Total amount submitted is the total amount minus any refunds. Your fees are assessed based on the total gross amount figure.
  • Amounts funded by batch: This shows the amount of revenue processed based on when you closed your batch. Note that the date submitted on your statement might not match the date the funds appear in your account due to cutoff restrictions, but you can log into your processor’s portal to match the batches up to your records.
  • Third-party transactions: This section shows any revenue that was processed by a party other than your processor. For example, if you process your American Express revenue through their Amex Direct program, you will see these amounts reflected here.
  • Fees charged: this is the master list of all the fees you were charged broken down by card brand and type of fee. There are three types of fees:
    • Processing fees: these are the fees charged by your processor for the services they provide. On Gravity’s statement these are represented by line items such as Disc 1, POS Auths, Datawire, and CPU Gtwy
    • Interchange: This is the fee charged by the bank that issued the credit card. Interchange makes up the largest portion of your fees. For more on how interchange is assessed, read our blog post on the subject. This fee is represented by the line item “Interchange,” though the final section of your statement will have a more cohesive breakdown of your Interchange fees (see below).
    • Card brand fees: These are the fees the card brands (e.g. Visa, Mastercard, Discover, and American Express) charge. On your Gravity statement they are represented by all of the other line items listed under the various card brands.
  • Interchange charges: this section breaks down all the Interchange fees you were charged. Banks assess different Interchange fees depending on the card brand and card type. For example, a Mastercard rewards card might charge a higher Interchange than a Mastercard debit card. Those different rates will be reflected here.

How to tell if you’re paying too much

There are two quick ways to use your statement to figure out if you’re paying more than you need to. The first is to look at your Interchange charges for any error or downgrade codes. These are marked as “standard” (often abbreviated STD or STAN) and indicate any card the bank marked as potentially fraudulent. There are many reasons why a bank might flag this–for example, if you forget to close a batch for a few days or if the amount authorized on a card is different from the amount settled. If you notice a lot of these downgrade errors, call your processor to see if they can figure out why.

The second way to figure out if you’re paying too much is to calculate your effective rate–the total percentage amount you’re being charged to process credit cards each month. The easiest way to do that is to divide your total processing fees by the total gross sales. For most businesses, your rate should be somewhere between 2-3%, though for some businesses (like coffee shops) with lower average transaction sizes, it could be higher. If you think your rate might be higher than it needs to be, call your processor to find out why. Can’t get a straight answer, call Gravity at 866-701-4700 or email [email protected]  and we’ll help you out.

By Ashlie Blaske, Business Analyst

This post was adapted from “Credit Card Processing 101: How to Read a Credit Card Statement,” part of the free Gravity Talks webinar program. For more information on past and upcoming webinars, visit www.gravitypayments.com/talks.

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