Merchant processing statements explained

What’s your first instinct when your merchant processing statement lands?

If it’s to shudder and do something – anything! – else, you’re not alone. Because for many businesses that accept credit and debit card payments, merchant statements are simply more paperwork – and often, they end up in the ‘too hard’ pile, gathering digital dust.

But actually, merchant statements contain clues crucial for understanding how much you’re paying in fees – and where that money is going. Merchant statements also help you understand the amount of chargebacks your business is getting – which, in turn, can help you mitigate the impact of chargeback fraud, and the loss of revenue it causes, on your business.

So below, we’re explaining everything you need to know about your merchant statement: what it is, where to find it, how to read it, and why it’s vital to understand it.

What is a merchant statement?

A merchant statement (also known as a merchant processing statement, or a credit card processing statement) is a document you’ll receive from your payment processor every month. It details your business’s transactions, sales activity, and payment processing fees during that period – and contains important insights to help you understand and optimize your operations.

Your merchant statement includes information about your:

• Transactions: this includes the transaction date and amount, the cardholder name, the card type, and the credit card authorization number – as well as details of any transaction reversals or refunds.
• Settlements: the total amount of funds you received in your bank account, for the specified period, after credit card processing fees have been subtracted.
• Fees and charges: these include interchange fees (which are paid to card-issuing banks), processing fees (which go to your payment service provider), and monthly service fees, as well as the costs of any equipment rental (such as card readers for accepting cashless payments from your bricks-and-mortar store).
• Chargebacks: if a customer has disputed a transaction (whether for legitimate or fraudulent reasons), this ‘chargeback’ will appear on your merchant statement, along with the reason for the dispute and the associated costs.

To learn more about chargebacks and how to deal with them when they occur, find out what a chargeback is – and learn how to win credit card disputes.

How to get a merchant statement

Your merchant statement is available through your acquirer or payment service provider – which is the company, like Checkout.com, you use to accept credit and debit card payments.

Your payment processor will generate your merchant statement for you automatically, usually on a monthly basis. To access this, you can log into your online merchant services portal and navigate to the relevant section of the dashboard. 

You’ll then be able to view and download your most recent merchant processing statement.

The exact specifics of how you do this will depend on which company processes your payments. With Checkout.com, for example, you can download your statement using our Reports API, with Secure File Transfer Protocol (SFTP), or by heading to the ‘Settlements’ tab of our online dashboard.

Whoever you take payments with, your merchant processing statement should always be available. If you’re having trouble accessing yours, reach out to your payment processor’s customer support team for assistance.

How to read a merchant processing statement

Simply downloading, or glancing at, your merchant statement isn’t enough – you need to make time to sit down with it, and actually read it.

In other words? As a merchant, you need to process your merchant processing statement in full. Here’s how.

1. Review your merchant statement’s basic details

When it comes to reading your merchant statement, start at the top – with the header.

Here’s where you’ll find your business’s details – including its name, address, VAT registration number, and merchant ID – as well as your payment processor’s legal business details. Your merchant statement’s header will also include the statement’s unique ID, the time period it covers, and the date it was generated.

2. Get a quick overview of your payment processing

Next, explore your merchant statement’s summary section. This provides an at-a-glance insight of your business’s processing activity during the period it covers.

The summary section includes your business’s total sales, net deposits, fees and charges, and information about chargebacks and refunds.

3. Identify your pricing model

All merchant statements should contain a fee breakdown – so they’re a handy way of understanding how much you’re paying in credit card processing costs. But to do so, you’ll need to identify the pricing model you’re on – something your statement can also help with.

Fees in the payment processing world come in two main types:

• Wholesale/base costs (such as interchange and assessment fees) that go to paying the banks and card issuers involved in the transaction. These costs are fixed and non-negotiable.
• Markup fees charged by your payment processor for their services. Often, these can be negotiated.

It’s useful to know what kind of split the fees you’re paying is between wholesale and markup – particularly because some reputable payment processors may hide high markup fees behind difficult-to-read merchant statements and complex pricing models.

On that note, some of the common pricing models payment processors use include:

• Tiered pricing, which categorizes transactions into different ‘tiers’ (such as ‘qualified’, ‘mid-qualified’, and ‘non-qualified’) based on their level of risk.
• Interchange-plus pricing, which lists the interchange fees (those charged by card networks such as Visa and Mastercard) separately from the payment processor’s own cut. It’s a simple, transparent fee structure which makes it easy to separate the wholesale costs you’re paying from the markup fees.
• Flat-rate pricing, generally a single, fixed per-transaction fee (such as 2.9%).
• Subscription pricing, in which you’ll be charged a monthly ‘membership’ fee on top of per-transaction rates.

4. Explore your account activity

Knowing which pricing model you’re on – as well as understanding how many of your fees are mandated by card networks, and which ones are simply tacked on so your payment processor can make a profit – helps you, in the long run, cut costs. To negotiate a better deal, switch to a pricing model that’s a comfier fit for your needs, and – ultimately – reinvest the funds you save into growing your business.4. Explore your account activity

Your merchant statement is an excellent way of keeping tabs on your business’s latest payment processing activity. This includes total transactions (their date and amount, plus the cardholder’s name and card type), as well as chargebacks.

Pay particular attention to the latter, because chargebacks can have a big impact on your brand and business – and if you’re receiving a lot of them, you need to be doing something about it.

‍Chargeback fraud is preventable (if not quite avoidable) – and reading your merchant statement carefully to understand how much chargebacks are costing your business is the first step to combating it. Your merchant statement can also be used as part of the supporting evidence you must provide during the chargeback representment process – where your case is heard by the issuing bank – so getting to grips with its contents can help you put together a more compelling case.

Why it is essential to review and understand the merchant statement

We’ve already touched on how reading and reviewing your merchant statement can help you fight chargeback fraud and understand how much you’re paying in markup fees.

But some of the other benefits of getting to grips with your merchant statement include:

• Spotting errors: in payment processing’s fast-paced world, mistakes happen. Regularly reviewing your merchant statement means you can catch these errors – such as unauthorized charges, incorrect transaction amounts, or double billing – before your customer finds out and complains (or worse, raises a chargeback).
• Forecasting with accuracy: with access to your business’s latest transaction data, you can analyze sales trends, customer preferences, and the overall health of your cash flow. You can then use this to make more informed, data-driven decisions around budgeting and inventory management, and plan with confidence for the future.
• Holding your payment processor to account: reviewing your statement helps keep your payment service provider honest – ensuring it’s adhering to the agreed-upon pricing and terms, and allowing you to address any deviations or discrepancies.
• Simplifying your taxes: when the IRS’s April tax deadline rolls around, your merchant statement is your best friend. Accurate transaction records are crucial for tax reporting purposes, and your merchant statements ensure yours are as up-to-date as possible.

How to get insights with Checkout.com

Your merchant statement is more than a digital sheaf of paper with a few numbers on it. It’s a treasure trove of rich information about your business – from the transactions you’ve made to the reversals you’ve received; from the fees you’re paying to the chargebacks you’ve witnessed.

Through this lens, your merchant statement is less of a statement, and more of a roadmap.

By thoroughly reading and reviewing your merchant statement – and comparing it to previous copies – you can trace your business’s journey from where it’s been to where it is; and, by using this information to better plan for and predict the future, understand where it’s going, too.

With a better understanding of your chargebacks, and the ability to spot and address any errors, a merchant statement also enables you to avoid dead ends, and neatly circumvent any potholes or pitfalls in the road ahead – making for a much smoother journey!

Here at Checkout.com, that journey is one we’re dedicated to traveling with you.

On our online platform, we provide reports on and insights into all your transactions and chargebacks – with a refreshingly simple, transparent pricing plan meaning you’ll know exactly what you’re paying in fees.

So get in touch with our sales team today to learn more about how we equip you with the data your business needs to thrive and grow.

We’ll have a chat about your payment processing needs, and get you set up with everything you need to accept payments in over 150 currencies – then track those transactions with ease.