Merchant Statement

What is a merchant statement?

A merchant statement is a monthly report that shows a business’s credit card processing activity. It breaks down total sales, processing fees, chargebacks, and deposits so businesses can track costs and reconcile payments. The payment processor issues the merchant statement, and it’s important to check regularly. Merchants that consistently check in on their statements better understand what they pay in processing fees, where they could reduce costs, and if the amount processed matches the amount deposited after fees.

Key Points

Merchant statements give businesses a clear look at their sales, fees, and chargebacks, making it easier to stay on top of payment processing costs.
Taking a few minutes to review them regularly can help catch hidden fees and even open the door to better rates and savings.

How to get a merchant statement

While some processors still send paper statements, most businesses get their merchant statements through an online portal or via an email from their payment processor. If a business isn’t receiving these reports, they can reach out to their payment processor’s customer service to request them.

How to read a merchant processing statement

Merchant statements have several key sections that can help businesses understand their processing fees:

Summary Section: Shows total transaction volume, fees, and net deposits.
Transaction Details: Breaks down individual sales, card types, and processing costs.
Interchange Fees: Lists the non-negotiable costs set by the card networks like Visa and Mastercard.
Processor Fees: Displays the additional markup charged by the payment processor.
Chargebacks & Refunds: Shows any customer disputes or refunds processed during the statement period.

Merchant statement example

Daniel’s retail store processes $15,000 in card transactions for the month. Their merchant statement might look like:

Total Sales: $15,000
Processing Fees: 2.5% + $0.10 per transaction
Interchange Fees: $250
Processor Markup: $100
Chargebacks: $75 from one disputed transaction

At first glance, everything seems fine, but after a closer look, Daniel notices his processing fees are eating into his profits more than he expected.

Total Processing Fees:

2.5% of $15,000 = $375
$0.10 per transaction (assuming 1,000 transactions) = $100
Total Fees = $375 + $100 + $250 + $100 + $75 = $900

$900 of his $15,000 in sales goes straight to processing fees. That’s 6% of his total revenue. After learning this, Daniel reached out to his payment processor to negotiate a better deal. He managed to lower his processing rate to 1.8% plus $0.05 per transaction.

New Processing Fees:

1.8% of $15,000 = $270
$0.05 per transaction = $50
Total New Fees = $270 + $50 + $250 + $100 + $75 = $745

By negotiating a lower rate, Daniel is able to reduce his processing costs by $155 per month—saving nearly $1,860 per year. An extra $1,860 a year could be huge to small businesses like Daniel’s retail stores. By reviewing merchant statements and asking the right questions, companies can improve their bottom line and have a better grasp on their finances.