A credit card processing analysis answers one question: how much of what you pay is unavoidable, and how much is your processor's choice? You can do a rough version yourself in about ten minutes with one monthly statement. Here is how.
1. Start with your effective rate
Find total card sales for the month and total fees. Divide fees by sales. That percentage is your effective rate, the single best number for comparing processors. Write it down before you look at anything else.
2. Separate interchange from markup
Interchange and card network fees are set by Visa, Mastercard, American Express and Discover. Every processor pays them. Everything else is markup. If your statement lumps it all together, that is a sign you are on bundled or tiered pricing.
3. Identify your pricing model
- TieredLines labelled qualified, mid-qualified and non-qualified. Usually the most expensive and hardest to read.
- Flat rateOne percentage on every sale. Simple, but often costs more once volume grows.
- Interchange plusInterchange at cost plus a stated markup or membership. The most transparent model.
4. Circle the junk fees
Look for PCI non-compliance, statement, batch header, "regulatory", annual, and technology fees. Our guide to 24 merchant statement fees explains each one.
5. Compare more than one month
Annual fees and minimums often hit in a single month. Compare at least two or three statements, including a slow month, before drawing conclusions.
6. Read the agreement, not just the statement
Early termination fees, equipment leases and auto-renewal terms live in your contract. A lease can cost far more over its term than buying the same terminal outright.
7. Check your surcharge or cash discount setup
Rules differ by state, and card brands have their own caps and disclosure rules. In California, for example, mandatory fees must be included in the displayed price. See cash discount vs. surcharge for the details.
8. Compare apples to apples
When you get a competing offer, ask for the same month of your sales priced their way, with every fee included. Compare effective rates, not advertised rates.
Want someone to do this for you? Send one statement and a specialist will return a free, line-by-line analysis with no obligation.