Starting a new business comes with a variety of necessary tasks that need to be done in order for it to maintain long-term success. Oftentimes, many of these tasks can be grouped into distinct categories which include finance, marketing, employment, and much else. If you’re looking for a way to make reading a credit card processing statement easier for you and your employees, here are some general tips you should be following.
One of the more daunting tasks that new business owners are faced with whenever they first start off is learning how to read a credit card processing statement. And hey, we get it- there’s so much information on these statements that it can get overwhelming very quickly.
What Is A Credit Card Processing Statement?
A credit card processing statement is a type of sales document that essentially lists all the sales and transactions that you have made for your business within a given time frame (usually a month). Credit card processing statements are interchangeable with merchant statements, so you might hear both of the terms being used, just know that they refer to the same thing.
One important thing to keep in mind is that not every credit card processing statement will look the same. But in general, there are some specific aspects of every credit card processing statement that are inherent to all documents regardless of their differences.
Those aspects include mainly four things: processing summaries, deposits, markup and authorizations, and pass-through fees. Let’s start by taking a closer look at each one.
Processing summaries are quite literally what their names suggest: summaries of all card transactions that have been already processed. They’re usually divided into rows and columns which display the amount paid, card used, type of transaction, and occasionally the date of transaction.
There are a few things you’ll want to notice and probably take note of whenever looking through your processing summaries. The first is what is called interchange fluctuation. These are differences in costs due to the type of transactions you accepted that month.
For example, if one month you chose to accept more pin transactions than swipe transactions, you’ll likely see a change in fees due to the different costs associated with processing pin transactions compared to swipes. This is completely natural and is not indicative of actual changes in net sales.
Lastly, pay attention to the average ticket size per month. This is just the average ticket size for each card brand you use. Take note of them and make sure they’re within your business’ merchant account limit.
Deposits Or Deposits By Day-or-Month
Depending on how your processing statement is printed, this next section can either be labeled as deposits or deposits by day or month. They’re really the same thing and are just differences in label printing.
And again depending on your processor, these deposits can be separated either by day or month (as the label suggests). Whichever way your deposits are divided up, they will almost always display the daily/monthly fees you pay. Note that they’re listed before fees were deducted.
The discount section is generally just what you owe the processor for processing your transactions. The final section is the settled amount which is the final amount that’s settled usually after fees are taken.
Markups And Authorizations
So this next section is where you’ll really want to spend some extra time. This section indicates where you could potentially be losing out on profit and sales. The markup is shown here. In case you’re unfamiliar with the term, the mark-up is essentially the extra costs you’re being charged for processing transactions. These extra costs are usually above the typical wholesale cost.
Markups generally vary depending on which processor you decide to go for. Some of them might have better rates than others, and it’s important for you to keep tabs on different processors. This allows you to double-check how much they’re marking off of your transactions.
If you happen to be in the market for a new processor, paying extra attention to these small details might help you make a better decision on who is the right fit for you.
Lastly, we have the part that no one truly likes: authorizations. No matter if your transaction went through or not (maybe it was voided or refunded), the processor will always charge an authorization fee. This is pretty much non-negotiable and will always be listed on your credit card processing fees list.
This is probably the section you’ll want to pay the most attention to if you really seek understanding processing statements on a deeper level.
In order for you to accept credit card payment transactions, payment providers charge a certain number of extra or ‘pass-through’ fees. Usually, processors are the ones who handle these fees until they can be transmitted to the responsible merchants.
Think of payment processors as middlemen. These fees are sent to them first so that you can accept credit card payments in the first place. Then almost instantly, they are redirected back to you.
This is the last of the processing statement sections on your credit card processing statements. Anything additional that you see might be subjective to your business alone. If you require any type of assistance with reading these additional statements, please contact us here.
How to Read a Credit Card Processing Statement: Getting The Most From Your Payments
Now you know more about how to read credit card processing statements. So how can you get the most benefit out of your transactions?
For that, we’d like for you to consult our team here at Payline Data. Our team works extra hard to help you with any payment problem or question you might be dealing with. Whether it’s offering in-store POS management to offering customizable payment solutions.
If you’ve been confronted with any type of dishonesty or complexity when it comes to payment processing, we’ve got your back. We’ve helped Fortune 500 companies get to achieve their financial goals by offering fresh and innovative payment solutions.
Interested in learning more about what we can do for you? Head on over to our blog to learn more!