If thoughts of reading your merchant account statement send you running for a bottle of pain reliever, take heart. While it certainly isn’t guaranteed to be a pleasant task, it is easier when you understand what all of the fuss is about. So, pull up a chair and put on your reading glasses. You’re about to take mind-numbing, hair-pulling, thrill-less adventure into understanding the world of credit card processing.
The Lingo
Merchant account statements use some very confusing and misleading language to describe your transactions. The first rule of good reading is to know what the words mean. Here is a simple breakdown of a tiered pricing program:
- Sales and credits are the total of all of your transactions during the billing period. You will see a dollar amount, and an actual transaction count.
- Net sales are the amount that you are really depositing from your credit card sales. This total is arrived at by subtracting your fees and discounts.
- Discounts – The name implies that you are getting some sort of discount on your individual transactions. Nothing could be farther from reality. It is the difference between your actual sales totals and what is deposited into your bank account.
- Basic P/I is how much you are being charged based on transaction type. It will break down your rate by credit card brand. It is usually expressed as a percentage of the sale.
- AVS fees- these are extra fees associated with reducing credit card fraud. It stands for address verification service and it is worth paying for.
- Batch fee- this is the amount that the processor charges for depositing transaction into your bank account. This should be done every 24 hours, or you might incur extra penalties.
- Mid and non-qualified transactions- this relates to the standard procedure that your processor expects you to use when accepting credit cards. The rules vary by company, but these are usually very expensive for you.
- T & E- Whenever banks hand out credit cards with travel and entertainment rewards, the processor is charged more to make up for the lost revenue. In turn, they pass these fees along to you.
Okay, sit back and take a deep breath. If you practice reading this with your statement in hand, it should become clear. If not, be rest assured that you will have another opportunity next month.
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