How to Read a Merchant Statement – Everything You Need to Know

How to Read a Merchant Statement – Everything You Need to Know

“With great power comes great responsibility” – This phrase should be in every merchant’s head when entering the business world. It is all fun and games until you must start dealing with numbers and reports. One such example is the merchant account statement. Not to worry, though, we will help you cover some of the most prominent merchant problems like how to read a merchant statement to make sure you never miss a cent on your payments, especially important for high risk merchants.

As a merchant, you will be provided with an electronic or paper report of the transactions that took place that month at the end of every month. Your payment processor will provide this document. In the report, you will see customer transaction details and the fees you pay monthly for payment processing.

While many merchants shy away from reading their merchant statements, they quickly realize (usually at the end of the first month) that they should have bitten their teeth and dived into the analysis long before.

Why Do You Need to Know How to Read a Merchant Account Statement

Why Read a Merchant Statement  

You cannot just “read” a merchant statement; you also must understand it, which might seem like another tedious task for business owners, but this is a must if you want your business to function as it should. One important tip to remember is that this process should be done daily. Merchants cannot just sit and wait until the end of the month to read their merchant account statement; they must log on to the system provided by their payment processor and monitor reports daily.

The purpose of a merchant account statement is to understand your incomes and costs and analyze how much are your base costs and markups and how you can lower them and stay competitive.

Steps to Understanding a Merchant Account Statement

It is essential to understand your merchant account statement, its components, and steps. We have listed out the most significant bits of your merchant account statement, but each merchant will have to dissect their own and get used to analyzing the details of their statements.

Monitor Your Merchant Account Transactions Daily

Monitor Merchant Account Transactions Daily  

A merchant account statement is a monthly report that sums up all the transactions that month. However, you should have an online account that your payment provider gives you access to monitor your transactions. As a merchant, you should not wait until the end of the month to review your transactions; instead, you should be monitoring them daily to ensure that the transactions are as you expect them to be.

Separating Costs

Separate Costs  

Once you understand the importance of understanding your merchant account statement, it is time to get into the details. What you want to do is to distinguish between two costs: the (wholesale) base cost and the markup. Wholesale fees are fixed and go to the issuing banks and the credit card associations; they are also non-negotiable. Markups are payment processing costs and go to your payment processor; they differ from processor to another and are negotiable.

Identify the Pricing Model

Identify Pricing Model  

The most common pricing models areinterchange-plus, membership, flat-rate,andtiered.


Interchange-Plus is the most frequent and most straightforward pricing model. An interchange-plus statement identifies the costs we mentioned above - wholesale and markup. Although this statement may be a little longer to read, you will not have to distinguish your costs, as they are all clearly shown.


Although a newer model, subscription or membership pricing is like interchange-plus, except that along with the markup charged as a monthly subscription fee, you also get a separate small per-transaction fee, making it favorable for merchants with larger transactions, as it lowers their costs.


Tiered pricing model is one of the least preferred, yet most merchants end up with this pricing model. Its pricing plans categorize your transactions into Qualified, Mid-qualified, and Non-qualified.

If your transactions are qualified, the rates are the lowest and are the highest for non-qualified. A merchant must meet all the payment processors criteria for processing or risk being downgraded to be qualified.

It is essential to understand the tiers as a merchant because some payment processors might take advantage by not disclosing the tier qualifications.


It is like tiered pricing except without the categories. Any transaction will cost the same, including the wholesale cost, which tends to trigger extremely high transaction costs, especially debit transactions. Processors that use flat-rate pricing do not charge a monthly fee because businesses use them with lower volumes. 

Determine Your Processing Fees

Determine Processing Fees  

Processing fees come in several forms but are typically easy to understand. These fees can be classified as a discount rate, which is a percentage of each transaction amount deducted from the transaction. These are usually pre-determined between you and your payment provider. Transaction fees are usually flat rate fees but are the same for each transaction. Monthly fees depend on the payment processing package you choose from your payment processor. And finally, there are miscellaneous fees that might occur in case of government or PCI compliance fees.

Analyze the Statement

Analyze Merchant Account Statement  

Ultimately, your monthly statement should give you the information you need to calculate your effective credit card rate and the total cost of processing. That is what you should pay the greatest attention to when learning to read a statement from a merchant account. So, to sum it up: 

  • Make sure that the total looks accurate
  • Make sure your fees balance
  • Calculate the effective rate/interest rate 


If you’ve been checking your high risk merchant account statement all month, the end of the month report should be a skim through all the transactions to make sure your numbers match. Compare monthly transactions, and you might notice any changes that occurred in the previous months, and in the future, anticipate any additional fees before they occur.