Understanding Your Merchant Account Statement: A Quick Guide to the Fine Print


If it feels like you need a special dictionary to understand all those cryptic terms on your merchant account statement, you’re not alone.

The payment processing industry is highly technical at best and downright baffling at worst.

Luckily, that’s what we’re here for.

MyWatchmen has put together a helpful list of common terminology that may appear on your statement.

The goal is to help you better defend your merchant account by understanding each transaction so you can get a handle on creeping charges and hidden fees.

Take a look:

Account Setup Fee/Setup Fee: Typically a one-time fee applied to the initial setup of your merchant account and used to cover charges by outside businesses that provide authorization, security and/or underwriting services. You may also see this fee if you transfer your merchant account.

Acquirer License Fee (ALF)/License Volume Fee: This fee is essentially what it sounds like: a fee charged by the card brand for using its network to process credit and debit card transactions.

Address Verification System/Address Verification Service (AVS): For online purchases or any card not present (CNP) transaction, AVS verifies that the billing information entered matches the billing information on file to help prevent fraud and reduce chargebacks. You may see an AVS fee on your merchant account.

Authorization Fee: When a customer makes a purchase, communication occurs between your software or point of sale (POS) terminal and the authorizing network. A fee is charged for all transaction types, including refunds.

Batch Settlement Fee/Daily Batch Fee: At the end of each day (or sometimes several times a day, depending on the company), your payment processor will total the “batch” of daily credit card transactions and charge a fee based on the total. If you have no credit card transactions for that day, you should not be charged a batch fee.

Brand Usage Fee/Network Fee: American Express, Mastercard, Visa and Discover are the “big four” brands or card associations, each with its own specific set of rules and fees associated with using its cards. An example is the Mastercard Network Access and Brand Usage Fee (MC NABU), which applies to all credit card transactions in which a U.S. bank-issued Mastercard is used at a U.S. merchant location.

Discount Rate/Discount Fee: The fee charged by the credit card processor for processing a transaction. Don’t let the name fool you—it’s just called that because of the percentage discounted from the total sale.

Merchant Location Fee (Mastercard): An annual fee based on how many locations a business operates. You can read more about it here.

EMV Non-compliance Fee/EMV Non-enabled Fee: EMV stands for Europay, Mastercard, Visa—the trio that developed the standard for chip card technology. A relatively new fee, it could affect your business if your equipment is not EMV compatible.

Fixed Acquirer Network Fee or FANF (Visa): Similar to Mastercard’s Merchant Location Fee, the FANF is based on the size of the merchant. So, smaller low-volume businesses with fewer locations would pay a lower fee, while high-volume businesses with multiple locations would pay a higher fee.

PCI Non-Validation Fee: PCI-DDS stands for Payment Card Industry Data Security Standards. Merchants who are PCI compliant will be issued a PCI Compliance Validation Certificate. However, if you fail to meet the standards for PCI compliance, you may be charged a fee (generally listed under the “Other Fees” section of your merchant account statement).

PIN Debit Discount Rate: When customers pay using a PIN (personal identification number) debit card, the information is routed to their bank at the time of purchase. Debit networks charge a fee for this service, but it is typically lower than the fee associated with credit card transactions.

Visa Acquirer Processing Fee (APF): Visa’s APF applies to all U.S.-based VISA authorizations processed in the United States regardless of where the issuing bank/cardholder is located. Visa also charges a separate APF for credit and debit card authorization transactions.

Here are a few more acronyms you might see on your merchant account statement:

ACH: Automated clearing house

AMEX: American Express

ARC: Accounts receivable conversion

AUTH: Authorization

AVS: Address verification system/service

BIN: Bank identification number

CHG: Charge

CHGB: Chargeback

CNP: Card not present

DISC: Discount

DS: Discover

MC: Mastercard

MCC: Merchant category code

POS: Point of Sale

QUAL, MQUAL, NQUAL: Qualified, mid-qualified, non-qualified (applies to rates)

TRANS: Transaction

VS: Visa

Spot something on your statement you still don’t understand? We have your back.

MyWatchmen understands you may not have the time to analyze every line of your merchant account statement—but that also means you could be paying too much on your rates and not even know it.

The good news? We can perform a comprehensive merchant account analysis to help you control costs and make sure you’re getting the best rates possible. And that’s just the beginning.

Most companies are overpaying thousands of dollars in hidden fees.

Our in-depth pricing analysis helps you understand where your payments processor may be overcharging you and consistently reveals opportunities to increase your bottom line.

Ready to take control of your merchant account?

Call 1-888-256-2845 and spend just 15 minutes on the phone with us to learn how MyWatchmen can help you reduce your rates and discover untapped revenue opportunities.


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