Credit cards are a significant and necessary form of payment for most merchants. Paying with plastic can making purchases easier, quicker, and allows the consumer to buy in larger quantities than if they paid with other methods. By learning the various terms on your statement and researching what credit cards work best for your business, merchants can help eliminate any confusion.
Learn the terms associated with your credit card statement
Reviewing your company’s statement may be intimidating with various terms and words that a business owner may not be completely familiar with. Although lengthy, here are the main components merchants need to focus on for their credit card processing solution:
- Summary: Located typically at the top of the statement, the summary shows the sales that are processed by the card brand as well as the total fees paid in order to process the sales. Some other items that may be included on the summary are any adjustments to the account, chargebacks, a breakdown of sales by the card brand, and number of refunds.
- Deposits: Below the summary is typically a list of settlements that are listed by day that break down the daily sales volume by the card amount and brand. This information is beneficial for reconciling settled batches to deposits that will go into the merchant’s business related bank account.
- Interchange: Interchange charges are the variable fees that are charged by the card payment networks for processing transactions. Credit card companies are the ones who set these specific rates, which are based off various factors such as customer card type, the size of the business, and industry. Research shows that that the average rate for swipe transactions are .05 percent for debit and 1.5-1.65 percent for VMC.
- Markup: The second term is the markup. Whether this is the discount rate, basis points, or something else, there is a percentage that is placed at the top of all transactions.
- Ancillary Fees: Ancillary fees are the fees such as statement fees, batch fees, customer service fees, monthly minimums, and more.
- Processing Services: This section provides your discount rate charges that you get from your interchange plus processor. Typically the charges will be divided by card brand and sales volume.
- Authorizations: This portion of the statement displays per authorization charges that come from an interchange plus provider and is split by card brand and/or transaction type. Sometimes the charges will be listed as AUTH or WAT charges.
- Discount Rate: The discount rate is the percentage of every transaction that is deducted as a fee. Qualified, mid-qualified, and non-qualified are the three different forms of rates.
Merchants should become informed on the basic terms in their statements to help ease the burden on confusing terminologies and numbers. By knowing the layout and terminology in account statements, merchants will be able to find what they are looking for much faster and be able to determine the costs of their current plan.