Every credit card and merchant account provider has a different set of costs associated with its services. Some of them are unavoidable, but others can be negotiated. Remember to choose interchange-plus, and keep in mind that most of the flat fees can be negotiated. The goal of understanding a monthly processing statement is being able to answer the following questions:Let's get started by outlining the basic steps to dissecting a merchant processing statement. Each step is important, and some build upon the last, so be sure to follow links that explain a supporting topic further if you're unclear on any details.

Separate Components of Cost

The first and most important step in reading a statement is separating base cost or wholesale from markups. Credit card processing is like anything else in that there's a "wholesale" base cost, and a markup on top of that.

If gross processing charges for a given month are $1,000, you should be able to look at your statement and see which portion of the $1,000 is going toward base cost, and which portion is going toward the processing markup.

Base Cost / Wholesale

Interchange fees (fees that go to banks that issue credit cards) and assessments (fees that go to the credit card companies) combine to create the base cost of credit card processing that is the same for all processors. The sum of interchange fees and assessments is the credit card processing industry's version of wholesale pricing.

The important point is to understand that base cost it is non-negotiable and the same for all processors. The base cost paid by the business now, is the same base cost to be paid if you switch processors anywhere.


The markup portion is any charge above the base cost (total of interchange and assessments). The markup is the only negotiable area of processing costs.