What is the first number I should look for?
Your effective rate. Divide total fees by total processing volume for the month and express it as a percentage. If you processed $42,000 and paid $1,155 in total fees, your effective rate is 2.75%. This is the only figure that captures every line item, which is why it is more useful than the rate you were quoted when you signed.
Where does the money on my statement actually go?
Interchange goes to the bank that issued your customer's card and is set by Visa, Mastercard, Discover and American Express. Assessments go to the card brands themselves. Both are the same for every business at a given card type and are not negotiable by anyone. The remainder is your processor's markup.
Which line items confuse people most?
- Discount rate — the percentage taken from each sale. May be bundled or itemised.
- Transaction or authorisation fee — a flat amount per attempted transaction, charged whether or not the sale completes.
- Monthly service or account fee — a fixed charge for keeping the account open.
- PCI compliance fee — charged monthly or annually for compliance programme administration.
- PCI non-compliance fee — a penalty applied when your annual self-assessment questionnaire is not on file. It is avoidable.
- Batch fee — charged each time you settle the day's transactions.
- AVS fee — address verification, usually a cent or two per check.
- Chargeback fee — a flat fee per dispute, charged whether you win or lose.
- Statement or regulatory fee — recurring administrative charges with varying names across processors.
What three questions should I ask my processor?
First, what is my markup, separate from interchange and assessments. Second, what is my early termination fee and when does the contract auto-renew. Third, is my equipment owned, leased or rented, and what happens to it if I leave.
A processor who cannot answer those three plainly is worth a second look.
Send us one recent processing statement and we will return a plain-English breakdown of your effective rate and line items.