How to read your payment processing statement

Most processing statements are built to be skimmed, not read. The headline is your effective rate, or a total deducted, and everything that produced it sits in a dense table underneath. Reading it is worth the twenty minutes, because every line falls into one of three groups: the cost of the card, your processor’s markup, and the fees around the rate.

The cost of the card: interchange

Every card transaction carries a wholesale cost called interchange. It is set by the card networks, published openly, and the same for everyone. Your processor does not control it and neither do you. It varies by card: a standard Visa debit runs around 0.80%, a Visa Infinite around 1.42%, a World Elite Mastercard around 1.50%, and corporate cards around 1.70%. In Canada roughly 68% of transactions are on premium cards, so the mix matters more here than in most markets.

If your statement lists interchange by card type, you are on interchange-plus pricing. If it shows one blended rate, you are on flat rate and the interchange is hidden inside it.

The markup: the only negotiable part of the rate

Everything above interchange is your processor’s. On interchange-plus it appears as a fixed percentage and a per-transaction amount you agreed to when you signed. That number is negotiable, and it drifts: many merchants signed at one rate years ago and have absorbed quiet increases since. Find the markup on your statement and compare it with what you signed.

Watch for “tiered” or “bundled” pricing, where transactions are grouped into qualified and non-qualified tiers. The tiers are set by the processor, and most transactions have a way of landing in the expensive one. It looks structured, but it is not true interchange-plus.

The fees around the rate

The rate is only part of your effective cost. Look for:

• Monthly minimums and statement fees, charged whether or not you process.
• PCI non-compliance fees, often charged when a questionnaire has not been filed, and avoidable.
• Terminal leases, which over a contract term can cost several times the hardware.
• Cross-border surcharges and currency conversion markups, if you sell outside Canada or the US.
• Contract terms, lock-in clauses and early exit costs, which are not fees on the statement but decide whether you can act on what you find.

What to do with it

Divide the total deducted by the total processed to get your true effective rate, then compare it with the interchange on your card mix. The gap is what you are paying for processing. If you are on flat rate and processing more than about $30K a month, that gap has usually outgrown the fixed costs of a dedicated merchant account. If you are on interchange-plus, the question is whether the markup is still the one you agreed to.

One recent statement is enough for us to run this for you. The free audit goes line by line and returns a report that is yours to keep, whatever you decide.