3 Things to Look for on Your January Credit Card Processing Statement

Merchants should have received their credit card processing statements for January activity within the last week or so. They should take the time to review (3) important items.

Are you being penalized for customer refunds?

It’s not uncommon for merchants to have a higher than normal number of customer refunds in January.  However, not all processors handle customer returns fairly and properly.  In fact, some see customer refunds as another revenue stream which can be very costly for the merchant.

Keep in mind that when a customer returns an item the merchant makes nothing on the sales. So what is a fair processing cost on $0.00 in net sales?  It depends on your processor.

Visa, MasterCard, and Discover return the interchange rate to the processor on most customer refunds.  American Express does not generally do the same.  However, just because the card companies return the interchange to the processor it doesn’t mean that your processor will return it to you.  In fact, some processors not only keep the interchange, they charge a second processing fee on the refund transaction.

Review your January statement to determine if your processor is 1) returning the interchange on customer refunds, 2) keeping the interchange on customer refunds, or 3) keeping the interchange on customer refunds plus charging a processing fee on the refund transaction.

The reason for checking the above goes beyond the extra cost the merchant may be paying on customer refunds.  How the processor treats the merchant on customer refunds can be a harbinger to how the processor treats the merchant on other rates and fees.  In other words, if your processor is not returning the interchange on customer refunds then they may have you on the wrong price plan or they may be inflating other fees.

Do the math – Some processors may have line items and figures on the statement that look like they are returning the interchange rate – for example “Refund Visa Credit …….- $102.45”  However, if you do the math you will find the $102.45 in this example never reaches the bottom line.  If you see this then you need to determine if the processor sent a check for the refund, deposited the refund in your account, or never credited your account for the refunded interchange.

Read the notices on the statement

Starting with the January 2017 statement, make it a point to read the notices on the statement each month this year.  Processors generally insert notices on the last page of the monthly statement although some do insert them on the first page.  The notices can be advertising for other products and services.  However, more importantly, they may have pertinent information on changing PCI security requirements or on upcoming rate and fee changes.

Cardholder security is most important. If there is a notice on PCI security and you do not understand it or how it impacts your business, then you need to contact your processor to review the impact on your business in detail.

Processors generally announce rate and fee changes 1 to 3 months prior to implementation.  Reading any notice on rate or fee increases will give you time to discuss the changes with the processor.

Specifically, you need to know if an increase is due to the card companies increasing their rates/fees or if it is due to the processor’s desire to make more revenue.  If the former, the processor should provide proof that the increase is 100% due to card company changes.  If the latter, than ask yourself if you find this to be an acceptable practice from your processor.  Always remember that there are 100’s of processors that would love to have your processing business.

Keep in mind that your contract or the notice on the statement may indicate that you automatically agree to all rate/fee changes if there is no objection and if you start processing under the new rate/fee structure.

Some processors find January to be a good month to increase rates/fees or invent new ones

Merchants should review the notices on their October through December 2016 statements specific to rate and fees changes.  Besides the garden variety rate and fee increase notices, I have seen some significant changes including new quarterly fees (charged 4 times per year) and new advance funding fees among others.

The card companies haven’t introduced new quarterly fees so any new quarterly fee is processor driven.

The advanced funding fee isn’t something new.  Some processors have been charging this fee for years.   However, more processors have recently started charging it on existing merchants.

The advanced funding means the processor now charges the merchant if the merchant wants the processor to debit their fee once a month (normally at the end of the month) instead each day during the month.  In other words, say your total monthly processing fee was $3,000.  The processor will now charge (generally between 0.02% – 0.05%) on your monthly processing volume if you want the $3,000 debited at the end of the month instead of having it debited at $100 per day on average through the course of the month. Most merchants prefer to be debited once a month for reconciliation purposes versus debited daily.

Lastly, statements generally have a Fee Section.  Compare the fees on the October 2016 statement to the fees on the January 2017 to see if there have been any changes.  Discuss any changes with your salesperson/processor.

Again, if your processor has introduced new fees or increase their fees beyond any card company changes ask yourself if you find this to be an acceptable practice.


  1. Insist on getting the interchange back whenever the card companies reimburse your processor for interchange on customer returns
  2. Always read the notices on the monthly statements
  3. Check the January statement for increases or new fees
  4. Always remember that the credit card processing industry is very competitive and there are 100’s of processors that would love your processing business

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