Your merchant statement is lying to you: here's how to read it

You open your merchant statement every month, glance at the total, wince, and file it away. You’re not alone. Nine out of ten merchants overpay on processing because the statement is designed to be confusing. The more line items you can’t explain, the more margin your processor keeps.

Most small businesses overpay by 15–40%. Not because they chose a bad processor, but because nobody ever taught them how to read the one document that shows exactly where the money is going.

The three layers of every processing fee

Every time a customer swipes, taps, or types in a card number, three separate entities take a cut. Understanding which is which is the difference between getting a fair deal and getting fleeced.

1. Interchange (non-negotiable)

This is the biggest piece, typically 50–70% of your total fees. It goes to the bank that issued your customer’s card. Your processor doesn’t control it. Nobody negotiates it. Visa and Mastercard publish these rates twice a year (April and October), and every processor in the country pays the same amount.

The range is enormous. A regulated debit card costs you 0.05% + $0.21 per transaction. A premium rewards credit card costs up to 2.40% + $0.10. Card-not-present transactions (online, phone orders) add another 0.20–0.50% on top because of higher fraud risk.

What this means for you: When a customer pays with a fancy rewards card, you’re subsidizing their points. That’s not your processor’s fault. It’s baked into the system.

2. Assessment fees (non-negotiable)

These go to the card networks themselves. Visa charges 0.14% on credit and 0.13% on debit. Mastercard charges about 0.13%. American Express takes 0.15%. There are also small fixed fees like Visa’s Fixed Acquirer Network Fee ($2–$85/month depending on your volume).

These fees are small, consistent, and not worth worrying about. They’re the same no matter who your processor is.

3. Processor markup (this is where you’re getting overcharged)

This is the only part your processor controls. The only part that’s negotiable. And the part they work hardest to hide.

A fair markup on interchange-plus pricing is 0.10–0.30% + $0.05–$0.10 per transaction. Industry consultants say the processor markup should represent 12–20% of your total processing cost. If your processor is taking more than that, you’re overpaying on the one fee you can actually do something about.

The pricing model decides what you can see

Your processor’s pricing model determines whether you can spot the markup or not. This matters more than most business owners realize.

Interchange-plus (most transparent): Your statement shows interchange, assessment, and markup as separate line items. You can see exactly what the card networks charged versus what your processor pocketed. If you agreed to a markup of 0.25% + $0.05, you can verify it on every line. This is what you want.

Flat-rate (simple but expensive at scale): Everything is bundled into one rate like 2.6% + $0.15. Easy to understand, impossible to audit. You can’t tell if your processor’s margin is 0.20% or 0.80% because the number is hidden inside the flat rate. Fine for businesses under $10,000/month. Expensive for everyone else.

Tiered (the worst of both worlds): Transactions get sorted into “qualified” (1.5–2.0%), “mid-qualified” (2.5–3.0%), and “non-qualified” (3.5–4.5%) buckets. Your processor controls which bucket each transaction lands in and can change the rules anytime. Industry consultants universally recommend avoiding this model.

Here’s what the difference looks like on $360,000 in annual volume:

Pricing Model	Effective Rate	Annual Cost
Interchange-plus	~2.1%	~$7,560
Tiered	~3.05%	~$10,980
Difference		$3,420/year

If you’re on tiered pricing, switching to interchange-plus is likely the single biggest cost reduction available to you.

The junk fees hiding in the fine print

Your processor quotes you a transaction rate (say 2.9% + $0.30) and it sounds reasonable. But your effective rate ends up at 3.5% or higher because of monthly fees that weren’t part of the pitch:

PCI compliance fee: $5–$30/month. Some processors charge a PCI non-compliance fee of $15–$125/month if you haven’t submitted compliance documentation. One audit found a business being charged $25/month for three years ($900 total) even after submitting their compliance paperwork. The processor simply hadn’t updated their records.
Monthly account fee: $5–$50/month
Gateway fee: $5–$25/month
Batch settlement fee: $0.05–$0.30 per batch (typically $1.50–$9.00/month)
Statement fee: $5–$10/month (often waived if you switch to e-statements)
Authorization fee: $0.02–$0.10 per transaction, charged even on declines
Monthly minimum: $20–$50/month if your fees fall below the threshold

On $10,000 in monthly volume, those fees stack up to $45–$114/month before a single transaction percentage is calculated. That bumps your effective rate from the quoted 2.9% to somewhere between 3.35% and 4.04%.

Then there are the truly predatory ones. Equipment leases that cost $20–$60/month for a terminal you could buy outright for $300–$500. Over a 5-year lease, that $500 terminal costs you $3,600–$7,200. Early termination fees of $295–$495 (or worse, “liquidated damages” calculated on the remaining contract value). Duplicate “network fees” charged on top of the actual card network assessment fees. One audit found $1,500 in duplicate network fees buried across 15 months of statements.

How to calculate your effective rate (30 seconds)

Pull your most recent statement. Find two numbers:

Total processing fees (everything they charged you, every line item)
Total card volume (total amount you processed)

Divide fees by volume. Multiply by 100. That’s your effective rate.

Example: $1,600 in total fees on $50,000 in volume = 3.2% effective rate.

Now do this for the last three months. If the number is climbing, your processor may have slipped in a rate increase without telling you. That happens more often than you’d think.

Here’s what the number tells you:

Under 2.5%: You’re probably in decent shape
2.5–3.0%: Room for improvement, worth a closer look
Over 3.0%: You’re leaving money on the table every single month

For specific benchmarks by industry, we published the full breakdown in 2026 processing rate benchmarks by business type.

What to do with this information

You now know more about your processing statement than 90% of business owners. Here’s how to use it:

Calculate your effective rate from the last three statements. Write the number down.
Identify your pricing model. If your statement shows separate interchange and markup lines, you’re on interchange-plus. If it shows qualified/mid-qualified/non-qualified tiers, you’re on tiered pricing and should switch.
Audit the monthly fees. Add up every non-transaction charge on your statement. PCI, account, gateway, batch, statement fees. On $25,000/month in volume, $75 in monthly fees adds 0.30% to your effective rate. That’s $900/year in fees that have nothing to do with processing cards.
Call your processor with your number. Tell them your effective rate and ask for a specific reduction. If they won’t move, get competitive quotes from interchange-plus processors. Make sure those quotes include all fees, not just the transaction rate.

If you don’t want to do the math yourself, that’s what a statement audit is for. We pull apart your statement line by line, benchmark every fee against what you should be paying, and show you exactly where the overage is hiding. The average business we audit is overpaying by $200–$400/month, which means the audit pays for itself before the first month is over.

Your processor is betting you’ll keep filing that statement without reading it. Now you don’t have to.