How to Understand Your Merchant Services Statement

For more than two decades that I have been in the merchant services business. I have frequently been shocked by how many merchants hand me unopened merchant statements, for review. They often tell me that they are just too complicated to understand. Unfortunately, many merchant service providers do this by design so that merchants don’t know too much. Obviously, if you’re in any kind of business you need to accept plastic as a form of payment. Many merchants are simply resigned to the fact that it is going to cost them something and it is just accepted. What I want to try and do here is give you some things that will hopefully help you in your understanding of your own merchant statement.

Before I get started, let me just say, there are numerous types of statements that would encompass the numerous types of pricing models. There is Three Tier, Four Tier and Cost-Plus or Interchange-Plus pricing models, each with their own form of jargon. First let’s talk about some basics of the differences.


In this form of pricing model credit card processing agent   you would likely see these “bundled” type listings:

QUALIFIED: This would be one rate listed such as 1.85% + $.15. This “qualified” rate would include swiped debit cards and generic, no perk type credit cards

MID-QUALIFIED: Again, one rate listed such as 2.25% + $.15. These types of transactions would typically be hand-keyed, card-not-present or some form of Visa/MC “perk” card that pays the cardholder points or frequent flyer miles.

NON-QUALIFIED: Rates listed would be the highest of the three and would typically represent business cards, for example.

The problem with this form of pricing is it is at the processors discretion which category they place the various card/transaction types. So, consequently, you may be paying more that is necessary on some.


This form of pricing came along when debit cards became more prevalent in the marketplace. Better than Three Tier because it provides for a lower rate for debit cards.

TIER ONE: This level would be for swiped debit cards (not pinned debit cards) and would represent your lowest rate. Debit cards, of course, have less risk to you, the merchant, and therefore have a lower rate structure.

TIER TWO: This would be mostly equivalent to what is shown above for Qualified transactions

TIER THREE: Here again, this would be similar to Mid-Qualifed transactions in the Three-Tier model

TIER FOUR: Transactions that would mostly mirror the Non-Qualified transactions above.

Again, as with Three Tier pricing, the processor places card/transaction types if the categories that they best deem appropriate. This is not necessarily the “best” from a financial for the merchant.


This form of pricing is, by far, the most transparent and most desirable form of pricing. That is, as long as the processor utilizes a format on their statements that are easy to read and understand. As an overview, here’s how this pricing differs from the two previously discussed. Keep in mind that not all statements will look alike but these are the types of categories you would typically see:


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