A merchant processing statement can be a complex document to digest. It may have a lot of numbers to wrap your head around. Add to that an array of terms you may not be familiar with, and it’s easy to get lost in numbers and jargon.

Why is this a problem?

Reading merchant statements can help you to spot potential credit card fraud and ensure your credit card provider isn’t overcharging you.

As such, merchant services statements contain valuable information you may miss if you don’t know how to read them. This guide dives into what a merchant statement is, why you should read it, and some tips on how to read merchant statements properly.

Credit card issues, merchants, and consumers collectively suffered $28.58 billion in credit card fraud in 2020.

– NilsonReport, Issue 1209 

What Is a Merchant Statement?

Merchant statements are documents that merchants receive every month. These documents detail all customer transactions the merchant handled, as well as any fees charged for those transactions.

This statement typically contains a deposit summary, which breaks down all fees for each party in transactions. This summary also details any additional fees a credit provider added to the transaction. Ultimately, the document can look like a massive list of numbers, making it exhausting to read, especially if you’re not stellar at the subject.

Adding to the confusion is that merchant statement can have many different names. Some processing partners call it a credit card processing statement or a payment processing statement. Others may name it a merchant services statement. Regardless of the name, you’ll know you have a merchant statement in your hands if you’re looking at a long list of credit card transactions.

image of a man reading a merchant statement.

Why Must You Read Your Merchant Statement?

Many merchants give these statements a passing glance before discarding them. They may justify this by believing they already know about their monthly transactions. The company’s accounting software covers its revenue streams. Why look at another document that appears to tell them what they already know?

That’s a huge mistake when it comes to merchant statements.

A merchant statement is much more than a list of transactions. It contains crucial information about two critical things to which you must pay attention:

  • Credit Card Processing Fees
  • Chargebacks

Credit Card Processing Fees

Your payment processor collects a fee for every credit card transaction your business runs. This fee is called a credit card processing fee. The issue with these fees is that they change regularly. Many payment processors alter their fees at least a couple of times annually. The changes may be a tiny increase. Collectively, that increase can add up to a lot of lost revenue.

You can separate your merchant statement using two cost components related to credit card processing fees:

Base or Wholesale Cost 

These are interchange fees and assessments. Interchange fees are what banks charge for each transaction. These fees vary depending on the type of credit card used. Assessments are any fees paid to a credit card company. The latter are fixed, meaning you can’t negotiate them.


The markup is any fee paid for a transaction that goes above your base or wholesale cost. These fees go to your payment processor, giving you room for negotiation. For example, Merchant One processing fees vary between 0.29% and 1.99%. If you’ve used Merchant One for a while, have a solid cash flow, and pay close to the 1.99% range, you may be able to negotiate closer to the 0.29% low point. However, payment processors like Stax promise 0% markup payment processing which is also another method payment processors use as a selling point for their services.

Many payment processing partners include the fees charged for each component in their merchant statements. By adding them up, you can determine your monthly pay. Doing this every month allows you to spot changes in fees. In the case of markups, you may be able to negotiate a lower rate with your processing partner.


A customer can request a chargeback if they believe the product or service you provided fits into any of the following categories:

  • They didn’t purchase it
  • They didn’t receive it
  • It was bought without their knowledge
  • You failed to deliver it to a satisfactory standard

Chargebacks allow credit card customers to protect themselves against fraud. However, the chargeback system is open to fraud itself. Some card users request chargebacks despite purchasing and receiving your product or service. You can dispute these chargeback requests if you can show the credit card owner bought the service and you delivered it.

71% of chargeback disputes are categorized as fraud, and of those, 77% are … the cardholder, not an identity thief.

– Electronic Merchant Systems 

Almost any merchant statement example you examine lists chargeback activity. As such, you can investigate these chargebacks and reclaim any money lost to fraudulent activity.


A collection of credit cards

How to Read a Merchant Statement

Now you understand what is merchant statement and know why it’s important to read yours, there’s one critical question to answer:

How do you read your merchant statement?

Follow these steps to understand better what your merchant statement tells you.

Step 1 – Understand What the Statement Includes

Most merchant statements include three sections:

  • Summary Page
  • Settlement Page
  • Charges Page

The summary page gives an overview of the total amount processed and a breakdown of the charges applied. A settlement page usually details the amount processed per day, with many including information about the type of card used. Finally, charges break down the fees attached to each transaction, including any penalties, processing fees, or chargebacks.

By understanding what each section shows, you can focus on the important information. This information is typically on the charges page.

Step 2 – Determine Your Payment Processors Charging Model

Each merchant statement has a pricing model. Merchants get to choose the model they use. Your pricing model likely is one of the following:

Tiered – This is the most common pricing model. It categorized transactions based on qualification status. You pay the highest fees on unqualified transactions and pay the lowest on qualified transactions.

Subscription – As one of the newest models, subscriptions are among the least common. You’ll usually pay a monthly subscription fee that covers most of your processor’s markup. Plus, you’ll pay a separate transaction fee, which gets smaller for larger transactions.

Interchange-Plus – Your processor lays out all wholesale and markup fees, creating the simplest pricing model. Merchant services such as ProMerchant provide this charging model. However, this model is also the longest, which adds reading time- so bare that in mind.

Flat Rate – Every transaction costs the same in this model, often leading to higher fees overall. If you have a flat-rate model, it’s often best to switch to a processor that offers one of the other three models.

Step 3 – Check the Discount Method

Most payment processors apply either a daily or monthly discount. This discount subtracts fees from your account, showing you what you’ve saved. Thankfully, you get to choose whether the processor applies daily or monthly fees.

It’s usually best to choose monthly discounts for ease of reading. With monthly, every fee and discount is lumped into a single figure that’s easy for you to track. A daily discount method gives you a breakdown of the qualified rate the processor charges daily, with additional fees charged at the end of each month.

You’ll know your processor uses the daily discount method if you see the phrase “less discount paid” on your merchant statement. Though more complicated to read, the daily discount method can quickly reveal if your processor has changed its fees for qualified transactions.

Step 4 – Work Out Your Processing Fees

Once you’ve established what you’re looking at, you can use a simple equation to calculate your processor’s fees:

Markup = Total Fees Charge – Interchange Costs

This equation subtracts your wholesale costs from your processor’s fees. You’re left with the total markup, which reveals whether your payment processor has altered its fees.

Step 5 – Determine if You Need to Renegotiate

It’s best to track markups each month over a year. At the end of each year, check the markups to see if they’ve changed. If they have, you may be able to negotiate a lower rate with your payment processor. Your ability to negotiate is strengthened if you handle a high volume of transactions and have minimal chargebacks.

Alternatively, compare your current markup with other credit processors. You can use what your current processor charges to negotiate lower fees with a different provider.

Picture of a credit card transaction in progress

Don’t Ignore Your Merchant Statements

Each month’s merchant processing statements contain valuable information about your credit card transactions. They reveal how much your payment processor charges and show you how much money you’re losing to chargebacks.

A customer who wins a chargeback dispute is nine times more likely to start another. If you have a customer who regularly raises chargeback disputes, you may have identified fraud in action.

– Shopify 

Ignore your merchant statements at your peril.

By regularly reading your statements, you can determine whether it’s time to renegotiate with your processor. You’ll also see if you’re paying more than you need to pay to your processor. Incorporate these statements into your bookkeeping efforts. The monthly merchant statement can be the key to unlocking thousands of dollars in cost savings for companies that handle large volumes of credit card transactions.