If you've ever opened your monthly merchant processing statement and weren't quite sure what you were looking at, you're not alone.
Payment processing statements can include pages of numbers, percentages, abbreviations and different fee categories. For a business owner who simply wants to know what they're paying to accept credit and debit cards, it can feel unnecessarily complicated.
The good news is that you don't need to understand every line of your statement.
Knowing a few key numbers can give you a much better understanding of your payment processing costs and help you determine what you're actually paying for.
In our previous articles, we explained how payment processing works and where credit card processing fees come from. Now, let's put that knowledge to use and look at your actual merchant statement.
Start With Your Total Processing Volume
One of the first numbers to find is your total monthly processing volume.
This tells you how much money your business accepted through your payment system during the statement period.
For example, if your statement shows $50,000 in monthly card sales, that's your starting point when evaluating the rest of the statement.
It's important to compare this number with your total fees because processing $5,000 and paying $500 in fees is obviously very different from processing $50,000 and paying the same amount.
Your processing volume gives the rest of the numbers context.
Find Your Total Processing Fees
Next, look for the total amount you paid in processing and account fees for the month.
Depending on your provider, this may be easy to find on the statement summary or it may require looking through several different sections.
This number can include more than just the percentage charged on your credit card transactions. Depending on your setup, your monthly bill could also include terminal costs, account fees, authorization charges, card-network fees and other processing-related costs.
That's why it's important to look at the whole statement rather than one advertised rate.
Once you know your processing volume and total fees, you already have a much better starting point for understanding your account.
Understand Your Effective Rate
One useful number you can calculate from your statement is your effective processing rate.
The basic calculation is:
Total processing fees ÷ total processing volume × 100
For example, suppose your business processed $50,000 during the month and your total processing costs were $900.
Your effective rate would be:
$900 ÷ $50,000 x 100
That gives you a simple way to see approximately how much your business paid relative to the amount it processed.
However, there's an important catch.
Your effective rate doesn't tell you everything.
Different businesses accept different combinations of credit cards and debit cards, and different credit cards can carry different underlying costs. A business whose customers frequently use premium credit cards may naturally have a different effective rate from a business whose customers use mostly lower-cost cards.
So your effective rate is a useful starting point, but it isn't the entire story.
Look for Your Processor's Pricing
One of the most important things to understand is what your payment provider is actually charging you.
As we explained in our previous article, not every fee on your statement goes to your processor.
There are underlying costs associated with accepting cards, including interchange and card-network fees. Your payment provider then charges its own pricing for providing your processing service.
If you're on a transparent cost-plus or interchange-plus pricing structure, you may be able to identify the provider's markup separately from those underlying costs.
With other pricing structures, it may be harder to determine exactly what portion of your rate represents the processor's pricing.
This is an important distinction because simply looking at the total cost of one Visa or Mastercard transaction doesn't necessarily tell you how your account is priced.
You need to understand what's underneath it.
Pay Attention to Credit Card and Debit Pricing Separately
Canadian businesses should also understand the difference between their credit card and Interac debit pricing.
Credit and debit don't necessarily follow the same pricing structure.
If your business accepts a lot of debit transactions, understanding how those transactions are being charged can be just as important as reviewing your credit card costs.
This is particularly important when comparing providers. A company might advertise an attractive credit card rate while having a completely different structure for debit or other transaction fees.
Your actual payment mix determines what matters most to your business.
Look Beyond the Percentage
It's easy to focus entirely on your credit card rate, but there may be other costs on your statement that deserve attention.
Depending on your provider and account, you might see charges related to your payment terminal, monthly account fees, reporting, PCI compliance or other services.
Individually, some of these charges may seem small, but they can add up over the course of a year. That's why it's important to look at the complete cost of your processing rather than focusing on one rate or one line of your statement.
This doesn't mean every additional fee is automatically bad. The important question is whether you understand what you're paying for and whether you're receiving value for it.
Don't Compare Processing Companies Using One Number
This is one of the most important things to understand when reading your statement.
If someone tells you:
“Our rate is 1.5%.”
That number alone doesn't give you enough information to make a proper comparison.
What cards does that rate apply to? What's included? What isn't included? Are there additional fees? What does the equipment cost? And how does that pricing compare with what you're actually paying today?
A proper comparison should look at your actual processing history.
That's why a recent merchant statement is so useful. Instead of guessing what your business might pay, you can use your real processing activity to build a more accurate side-by-side comparison.
Five Numbers Worth Knowing
You don't need to become an expert in merchant processing statements.
If you want a simple starting point, make sure you understand these five things:
How much you processed How much you paid in total How your credit card processing is priced How your debit transactions are priced What additional monthly or equipment fees you're paying
If you can answer those five questions, you already have a much better understanding of your payment processing.
And if you can't find the answers, your payment provider should be able to explain them to you.
Why JAZ Payments Starts With the Statement
At JAZ Payments, one of the first things we often ask a business owner for is a recent merchant statement.
We're not asking for it to make the process more complicated. We're asking because it's the best way to make the conversation more accurate and transparent.
Instead of throwing out an advertised rate and telling you we can save you money, we can look at what your business is actually paying today.
We can see your processing volume, understand your current pricing structure, look at the other fees on your account and then make a proper side-by-side comparison.
If we can save you money, we'll show you exactly where the savings come from.
That's also why we've built JAZ Payments around transparent cost-plus pricing, month-to-month service and direct support from our Canadian family-run team.
You shouldn't need to take our word for what payment processing will cost. You should be able to see the numbers for yourself.
Your Merchant Statement Shouldn't Be a Mystery
Merchant statements can look complicated, but the basic questions are actually pretty simple.
How much did I process? How much did I pay? What is my provider charging me? And what else am I paying for?
Once you know where to look, reviewing your statement becomes much easier.
More importantly, understanding those numbers gives you the ability to ask better questions and make a more informed decision about whether your current payment-processing setup is right for your business.
Not Sure What You're Looking At?
Send JAZ Payments a recent merchant statement and we'll break it down for you.
We'll show you how your current pricing works, explain the different costs and put together a side-by-side comparison so you can see whether there's an opportunity to improve your setup.
No pressure and no obligation to switch—just a clearer understanding of what you're currently paying.
