How to Understand Your Card Provider’s Transaction Statements

How to Read a Merchant Processing Statement: What Are You Actually Paying?

Open your latest merchant processing statement.

Before looking at individual rates, find three numbers:

How much did you process?

How much were you charged?

How much money actually reached your bank?

Those three figures are often not as easy to reconcile as merchants expect.

A statement might show £250,000 of card sales, while the amount paid into the business bank account is considerably lower.

That does not necessarily mean the provider has charged thousands of pounds in processing fees.

The difference could include:

• Refunds
• Chargebacks
• Rolling reserves
• Authorisation charges
• Gateway costs
• Currency conversion
• Previous adjustments
• Other deductions

The most useful way to read a merchant statement is therefore not to start with the advertised card rate.

Start by following the money.

This guide shows you how.

Before you start: get the right documents

Ideally, have these open together:

1. Your latest merchant processing statement or monthly invoice
2. Your original pricing schedule or current contract
3. Your settlement or payout report

If you are reviewing whether your costs have changed, also download the same statement from:

• Three months ago
• Six or twelve months ago

A single statement tells you what happened during one billing period.

Several statements tell you whether something has changed.

That distinction is important.

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Find Your New Processor

First, find the total amount processed

Suppose your statement shows:

Card sales: £250,000

Do not immediately assume that £250,000 should have appeared in the business bank account.

First establish exactly what the figure means.

Depending on the provider, the statement may distinguish between:

• Gross card sales
• Captured transactions
• Refunds
• Reversals
• Chargebacks
• Net sales
• Settled transactions

If you processed £250,000 of successful sales but refunded £6,000 during the month, your commercial position is already different from a business that processed £250,000 with no refunds.

The card-sales figure is the starting point, not the final payout.

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Next, find the number of transactions

This is the number merchants often overlook.

Consider two businesses that each process £250,000 per month.

Business A

500 payments averaging £500.

Business B

10,000 payments averaging £25.

Both businesses process exactly the same value.

Their costs can be very different.

If the provider charges:

• A percentage of every sale
• A fixed transaction charge
• A separate authorisation fee

Business B may incur substantially more fixed charges simply because it submits far more transactions.

This is why monthly turnover on its own is not enough to understand card-processing costs.

You also need:

Successful transaction count

and, where available:

Total authorisation attempts

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Successful transactions and authorisation attempts are not the same number

This is one of the first things I would look for on a merchant statement.

Suppose the business has:

10,000 successful transactions

but:

12,000 authorisation attempts

If the provider charges 2p every time an authorisation is submitted, the cost is based on:

12,000 × 2p = £240

not:

10,000 × 2p = £200

That £40 difference is small in isolation.

But for a larger ecommerce business submitting hundreds of thousands of attempts, unsuccessful authorisations can become a meaningful cost.

More importantly, a large difference between attempted and successful transactions may point to something operational that deserves investigation.

That could include:

• Issuer declines
• Customer retries
• Authentication problems
• Duplicate attempts
• Fraud controls
• Recurring-payment failures

Your statement tells you about cost.

Your gateway and ecommerce reporting may be needed to explain why those attempts occurred.

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Find Your New Processor

Now find the actual card-processing charges

This is where statements become difficult.

Different providers use different terminology and different pricing structures.

The statement may contain charges relating to:

• Interchange
• Scheme or network fees
• Processor or acquirer margin
• Transaction fees
• Authorisations
• Gateway
• Terminals
• Refunds
• Chargebacks
• PCI administration
• Currency conversion
• International cards
• Commercial cards
• Monthly services

Do not assume every deduction shown on the statement is part of the advertised card-processing percentage.

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The most useful number: your effective processing rate

The easiest first comparison is to calculate how much the business paid relative to how much it processed.

For example:

Card sales: £250,000

Total payment-processing charges: £2,745

The effective processing rate is:

£2,745 ÷ £250,000 × 100 = 1.10%

That 1.10% is often much more useful than looking at a quoted:

0.70% debit-card rate

because it reflects the cost the business actually experienced.

But there is an important qualification.

Only include genuine payment charges in that calculation.

Do not automatically include:

• Customer refunds
• Chargeback principal
• Rolling reserves
• Money held temporarily
• Sales reversals

Those affect cash flow, but they are not necessarily processing fees.

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Fees and movements of money are not the same thing

This is one of the easiest ways to misread a merchant statement.

Imagine the following month:

A merchant looking only at the difference between:

£250,000 processed

and:

£234,255 received

might conclude:

“Card processing has cost me £15,745.”

It hasn't necessarily.

In this example:

£2,745 represents payment-related fees.

The remainder relates to:

• Customer refunds
• Chargebacks
• Money temporarily retained as reserve

Those are commercially important, but they should be analysed separately.

This distinction becomes particularly important when comparing providers.

A provider charging a lower processing rate but retaining a substantial rolling reserve may leave the business with less usable cash.

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Find Your New Processor

Where is the provider's margin?

This depends on the pricing model.

Blended pricing

A blended price may combine several underlying costs into one merchant rate.

For example, the business might see different prices for:

• Consumer debit
• Consumer credit
• Commercial cards
• International cards

or possibly a more broadly blended rate.

The statement may tell you what you paid, but it may not allow you to separate precisely:

• Interchange
• Scheme charges
• Provider margin

You can calculate your overall effective cost.

You cannot necessarily calculate the provider's exact margin from the statement alone.

Interchange Plus

With IC+ pricing, the merchant normally pays:

Interchange + provider/acquirer charge

Additional scheme or processing costs may be treated according to the particular pricing arrangement.

Interchange Plus Plus

IC++ usually separates the economics further:

Interchange + scheme/processing costs + provider/acquirer charge

This can make it easier to identify which part of the cost changed.

But IC++ does not automatically mean the merchant is paying less.

Transparency and price are different things.

A clearly itemised expensive contract is still expensive.

For the broader explanation, see the MAS guide to merchant account fees.

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Don't assume the biggest percentage is the biggest problem

Suppose your statement contains:

UK consumer debit: 0.60%

Commercial card: 1.80%

The immediate reaction may be to focus on the 1.80%.

But the correct question is:

How much turnover actually went through at 1.80%?

If 95% of your payments are consumer debit cards, changing the commercial-card rate may have relatively little effect on the total bill.

Likewise, a seemingly tiny fixed fee can become important at scale.

Example

A provider charges an extra:

3p per authorisation

At 1,000 attempts:

£30

At 100,000 attempts:

£3,000

At 1 million attempts:

£30,000

Never assess a fee without applying it to the merchant's actual transaction profile.

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Find Your New Processor

The card mix explains more than merchants realise

Your processing costs can rise even where the provider has not changed its headline margin.

Suppose your sales remain at £250,000 per month.

In January, most payments are:

• UK consumer debit
• Domestic
• Card present

In June, the same turnover contains more:

• Commercial cards
• International cards
• Ecommerce payments
• Foreign-issued cards

The total processing bill may rise because the mix of transactions changed.

That is not the same as the provider increasing its own margin.

This is why comparing:

January cost versus June cost

without comparing the underlying card mix can produce the wrong conclusion.

When costs change, ask:

Did the provider's price change, or did our transactions change?

Sometimes the answer is both.

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Compare what was quoted with what actually happened

Take the original quotation or pricing schedule and put it beside the statement.

You are looking for differences before considering switching.

For example:

The card percentage has not changed.

But the business is still paying more.

This is why reviewing only the headline rate is insufficient.

Look at:

• Percentage charges
• Pence-per-transaction charges
• Authorisation fees
• Monthly account fees
• Gateway charges
• Refund charges
• Chargeback charges
• Terminal costs
• PCI-related charges
• Currency costs
• Minimum charges

The new MAS guide to comparing card-processing quotations explains how to normalise different offers.

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Find Your New Processor

Find fees that appear only when something happens

Some charges may not appear every month.

Examples can include:

• Chargeback administration
• Retrieval requests
• Refund charges
• Failed or additional authorisation attempts
• Currency conversion
• Exceptional account adjustments

This matters when comparing a quiet month's statement against a new provider quotation.

A low-dispute month can make the current provider appear cheaper than it normally is.

A month containing several chargebacks can make it appear unusually expensive.

Where possible, I would use three representative months rather than one.

For seasonal businesses, twelve-month data can be even more useful.

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Retrieval requests are not the same as chargebacks

A retrieval request may arise when information about a card transaction is requested as part of the dispute process.

The PSR actually updated its card-acquiring implementation guidance in October 2024 to replace the term “revival fee”with the more commonly understood “retrieval fee” in its summary-box guidance. 

A statement may therefore contain:

• Retrieval fee
• Chargeback fee
• Chargeback amount

These do not necessarily represent the same thing.

For example, if a £500 transaction is charged back and the provider also applies a £20 administration fee, the statement could show:

£500 movement of merchant funds

plus:

£20 fee

When calculating payment-processing costs, do not automatically treat the £520 as a provider fee.

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Look for the charges outside the statement

One of the biggest mistakes is assuming the merchant statement contains the entire payment cost.

It may not.

The business could receive separate invoices for:

• Payment gateway
• Card terminals
• EPOS
• Fraud tools
• Chargeback software
• Payment orchestration
• PCI service
• Other payment technology

A provider quotation might bundle these services while the existing setup bills them separately.

Or the opposite may happen.

If you are trying to understand the total cost of accepting payments, the merchant statement is only one document.

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Find Your New Processor

Check whether your provider is deducting fees before settlement

Providers can collect charges differently.

Some may:

• Deduct fees from each settlement
• Deduct fees periodically
• Invoice separately
• Use a combination of methods

This matters when reconciling the bank account.

For example:

Card sales: £10,000

If the provider settles gross:

Bank payout: £10,000

and separately invoices £100.

If it settles net:

Bank payout: £9,900

The processing economics may be identical.

The bank reconciliation looks different.

Do not compare providers merely by comparing the number that appears in the bank account.

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What is that reserve line?

A rolling reserve is not an ordinary processing charge.

If a provider retains:

10% of a £10,000 settlement = £1,000

that £1,000 may remain the merchant's money subject to the reserve arrangement rather than becoming provider revenue.

The statement should therefore distinguish between:

Fees

and:

Funds retained

For businesses with meaningful reserves, I would calculate two numbers:

Processing cost

What has the provider actually charged?

Usable cash

How much of the sales revenue has become available to the business?

Both matter, but they answer different questions.

See the MAS guide to merchant account rolling reserves.

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Your Card Payments Summary Box may help

For relevant merchants using card-acquiring services from providers covered by the Payment Systems Regulator's Specific Direction 14, the provider must supply a bespoke summary box containing key pricing and non-pricing information.

The requirement applies to relevant merchants with annual card turnover of up to £50 million and to the directed PSPs covered by the Direction. The summary box must appear at the head of monthly or other periodic billing information and be displayed prominently where billing information is supplied through an online merchant portal. 

The PSR introduced the measure because it found that merchants could have difficulty understanding and comparing card-acquiring prices. It specifically intended the summary box to help businesses compare an existing arrangement with alternative quotations. 

That makes the summary box useful.

But it does not make the detailed statement redundant.

Your statement and associated reports can still help reveal:

• Actual transaction mix
• Number of attempts
• Refund activity
• Chargebacks
• Reserve movements
• Settlement
• Month-to-month variation

Think of the summary box as the commercial overview and the detailed statement as the evidence of what actually happened.

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Find Your New Processor

What your merchant statement cannot tell you

This is equally important.

A statement may show you that costs changed.

It may not tell you why.

For example, a statement may not fully explain:

Why authorisation rates have fallen

You may need gateway or processor decline reporting.

Why customers abandon checkout

You need ecommerce analytics.

Why a particular fraud rule blocked customers

You need fraud-system reporting.

Whether your terminal rental contract is ending

That may be held under a separate agreement.

Whether your integration is causing duplicate payments

You may need gateway and application logs.

Whether a new provider would actually be cheaper

You need a like-for-like quotation based on the same transaction profile.

The statement is evidence.

It is not the entire payments operation.

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What I would look at first on a merchant statement

If a business sent MAS a statement and asked:

“Am I paying too much?”

I would not begin with the card percentage.

I would first want to establish:

1. Processing volume

How much was actually processed?

2. Number of payments

How many successful transactions were there?

3. Authorisation attempts

Are we being charged materially more attempts than successful payments?

4. Average transaction

This affects how important fixed charges are.

5. Card mix

How much is consumer, commercial and international?

6. Pricing model

Blended, IC+, IC++ or another structure?

7. Charges outside the percentage

Gateway, auths, terminals, monthly fees and other recurring costs.

8. Cash adjustments

Refunds, chargebacks and reserves.

Only then does a headline processing rate become meaningful.

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A ten-minute statement review

Take your latest statement and answer these questions.

1. How much did we process?

Use the gross successful sales figure.

2. How many transactions produced that turnover?

Calculate the average transaction.

3. How many authorisation attempts occurred?

Compare this with successful transactions.

4. What did card acceptance actually cost?

Add genuine fees and charges.

5. What is our effective processing rate?

Divide payment charges by card sales.

6. Which three charges cost us the most money?

Not the highest percentages — the highest pound amounts.

7. Which costs have changed since the earlier statement?

Compare like for like.

8. Did our transaction mix change?

Especially commercial, international and ecommerce cards.

9. Were any deductions actually reserves, refunds or chargebacks rather than fees?

Separate them.

10. Does the bank payout reconcile?

You should be able to explain the route from gross transactions to usable cash.

If you cannot answer those ten questions from your existing reports, that itself is useful information about the quality of the provider's reporting.

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A statement can reveal that switching isn't the answer

This is an important point.

A merchant may send a statement expecting to discover that its provider is expensive.

The analysis might instead show:

• Acquirer margin is competitive
• Gateway cost is reasonable
• Transaction rates have not changed
• The real increase comes from international-card growth
• Authorisation attempts have risen sharply

In that situation, moving provider solely for a slightly lower percentage may not solve the problem.

The better action might be:

• Review failed transactions
• Improve routing
• Change the checkout
• Analyse international acquiring
• Negotiate one particular fee

Likewise, another merchant may discover that:

• Processing mix is stable
• Turnover is stable
• Authorisation volume is stable
• Provider margin has risen
• Gateway and account fees have increased

That is a much stronger basis for negotiating or shopping around.

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Find Your New Processor

Don't send a new provider one headline number

If you are obtaining a quote, saying:

“We process £250,000 per month and currently pay 1%.”

isn't enough.

That provider does not know whether the £250,000 consists of:

• 500 or 20,000 transactions
• Consumer or commercial cards
• UK or international cards
• Card-present or ecommerce
• GBP or multiple currencies
• 10,000 or 15,000 authorisation attempts

A more useful quote starts with the actual transaction profile.

Where possible, supply several recent statements.

Redact information that the recipient does not need, and establish who will receive the documents before sharing commercially sensitive information.

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Should you compare statements or quotations?

Both.

Your current statement answers:

What are we actually paying now?

A quotation answers:

What might another provider charge for the same business?

The comparison only works if both are based on the same transaction profile.

That means comparing:

• Same volume
• Same card mix
• Same transaction count
• Same channels
• Same international mix
• Same gateway requirements
• Same terminals
• Same settlement expectations

Otherwise, the cheaper-looking quotation may simply be pricing a different version of the business.

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When should you review your merchant statement?

I would not wait until the contract is about to expire.

For many businesses, a quarterly review is enough to spot meaningful changes without turning payment costs into a constant administrative exercise.

Higher-volume or more complex merchants may want to monitor more frequently.

A review is particularly worthwhile when:

• Turnover changes materially
• Average transaction changes
• International sales grow
• Ecommerce volume increases
• A provider announces a price change
• Chargebacks increase
• A reserve is introduced
• The business adds another payment channel
• The contract approaches renewal
• A competitor submits a new quotation

The useful comparison is change over time, not simply whether this month's statement looks expensive.

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Looking for help understanding a merchant processing statement?

Merchant Advice Service can help businesses review their current payment setup and understand what information is relevant when comparing provider options.

If you want to assess your existing costs, useful information includes:

• Recent merchant statements
• Current pricing schedule
• Monthly card turnover
• Transaction count
• Card-present, ecommerce and MOTO split
• Average and maximum transaction
• International-card activity
• Current gateway or terminals
• Settlement
• Reserve
• Any quotation you are considering

MAS may be able to identify areas worth questioning or compare the existing arrangement with potentially relevant provider options.

MAS does not guarantee that switching will reduce costs, and provider quotations remain subject to the relevant provider's own pricing, underwriting and contractual terms.

Sources and regulatory references

• Payment Systems Regulator — Specific Direction 14
  The PSR direction requiring specified card-acquiring providers to provide eligible merchants with bespoke summary information covering key price and non-price elements.
• Payment Systems Regulator — Card-acquiring market remedies
  Explains the introduction of merchant summary boxes, online quotation tools and other measures intended to improve transparency and provider comparison.
• Payment Systems Regulator — Implementation advice for summary boxes
  Current PSR implementation guidance covering the information and terminology used within the card-payments summary box and quotation tools.
• Payment Systems Regulator — Card-acquiring market review
  The underlying PSR market review examining merchant pricing, transparency, switching and competition in UK card acquiring.

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About Merchant Advice Service

Merchant Advice Service provides free, independent guidance to businesses looking for help with card payments, payment gateways and more complex payment requirements.

Where appropriate, MAS may introduce a business to a relevant payment provider. We may receive a referral fee or commission if an introduction results in a completed account or service.

MAS does not necessarily compare every provider in the market, and all applications remain subject to the relevant provider's own assessment, underwriting and approval.

This article provides general payments information and does not constitute legal, regulatory, accounting or financial advice. Statement formats, terminology, pricing structures, settlement arrangements and provider charges vary.

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