How To Read Your Card Machine Statement (And Spot Hidden Fees)

Almost every business owner we sit down with says the same thing about their card statement: they know roughly what it costs, but they could not tell you why. That is not carelessness. Merchant statements are long, the language is technical, and the important number is not printed anywhere on the page.

Start with one number: your effective rate

Ignore the percentages on the statement for a moment. Take the total amount deducted for the month, including every fee, and divide it by the total value of card payments you took. Multiply by one hundred. That is your effective rate, and it is the only figure worth comparing between providers.

If you took forty thousand pounds and the total deductions were seven hundred pounds, your effective rate is 1.75 per cent. That is the number to hold in your head, because it already contains every fee somebody buried further down the page.

Then find the lines that are not transaction charges

Once you have the effective rate, work out how much of it is not really the rate at all. These are the lines to look for.

• Terminal rental or hire. A monthly charge for a machine that was paid off years ago.
• PCI compliance fee, and sometimes a separate PCI non-compliance fee if a form was never returned.
• Minimum monthly service charge, which quietly tops you up to a floor in quiet months.
• Authorisation or transaction fees, charged per transaction on top of the percentage. On low average spend this can matter more than the rate.
• Statement or admin fees, usually small and usually pointless.
• Gateway fees if you also take payments online.

Check whether the rate you were quoted still applies

Rates drift. A provider can increase pricing with written notice, and notice usually arrives as a line on a statement nobody reads. Compare this month against the same month last year. If the effective rate has moved and nothing about your business has, the pricing was changed on you.

Look at your card mix before you compare quotes

Not all cards cost the same to accept. Consumer debit is cheapest, commercial and corporate cards cost more, and American Express sits on its own rate. If a quote gives you one headline percentage without asking what your mix looks like, it is not a real quote. Ask what happens when a customer pays with a business card.

Two questions worth asking your current provider

First: what is my current effective rate, including all fees. Second: when does my contract end and what notice do I have to give. A provider who is comfortable with their pricing will answer both quickly.

If you would rather not do the arithmetic, send us a recent statement and we will mark it up and hand it back with the figure written on it. If you are already on a strong rate, we will tell you that, and you will have lost nothing but an email.