How to read a merchant statement

A merchant statement is one of the few bills a restaurant pays every month without being able to check it. They are long, inconsistently formatted between providers, and full of terms that appear nowhere else in the business. That is not entirely an accident: a bill that is hard to compare is a bill that is hard to leave.

The good news is that underneath the formatting, every card fee falls into one of three layers, and only one of them is actually between you and your processor.

Layer one: interchange

Interchange is set by the card networks and goes to the bank that issued your guest's card. Your processor does not set it and cannot discount it. It varies by card type, and this is why your effective cost drifts month to month even when nothing about your business changed: a month with more premium rewards cards costs more than a month with more debit.

It is also why a quoted rate can be honest and still not predict your bill. The quote covers the markup; the card mix drives the rest.

Layer two: assessments

Assessments are the networks' own fees, also non-negotiable and also passed through. They are smaller than interchange and are usually the least interesting part of the statement, but they belong in your total because leaving them out understates what you actually pay.

Layer three: the processor's markup

This is the only layer anyone can compete on, and it is the layer a quote is really about. On an interchange-plus statement it is stated separately, which is why interchange-plus is the model most operators are advised to ask for: you can see the two halves apart.

On a tiered or blended statement it is folded into rate buckets with names like qualified and non-qualified, and the categories are defined by the processor rather than by anyone else. That is not automatically a worse deal, but it is a deal you cannot audit line by line.

Lines worth questioning

• ✓Monthly, statement, and account fees. Small individually; check whether they were in the quote at all.
• ✓PCI fees and PCI non-compliance fees. The second is avoidable by completing your self-assessment questionnaire, and a surprising number of restaurants pay it for years without knowing what it is.
• ✓Batch fees. Charged per batch close, so a business closing several batches a day pays several times.
• ✓Downgrade or non-qualified buckets. Worth asking what specifically causes a transaction to land there and how often it happens to you.
• ✓Equipment or terminal lease lines. These frequently outlive the equipment and are often on a separate agreement from the processing itself.
• ✓Early termination or annual fees. If you have to check whether you can leave, that is the answer to a different question worth having.

What to ask a prospective provider

Ask for a quote against your own recent statements rather than a generic profile, because your card mix is the variable that decides your bill. Ask which model the quote is — interchange-plus or tiered — and ask for the total monthly cost, not the headline rate. Then work out the effective rate the quote implies and compare it to the one you are paying now.

If a provider is unwilling to quote against your actual statements, that is itself information.

Where the software choice comes in

Payments and point-of-sale are usually two relationships, which is why the statement and the sales report are two documents that have to be reconciled by hand. In Opero payments are embedded: the charge is created by the same system that created the order and matched to it automatically, so what you take and what you were charged for are the same record rather than two reports to line up.

Card-present payments need a supported card reader — one per location, bought from us. Software is priced per location with unlimited devices, so the payments conversation stays about payments rather than about per-terminal fees stacked on top.