Payment processing

Understand Credit Card Merchant Statements to Boost Your Bottom Line

ClientPay's Vice President, Ryan Beck, helps decipher credit card merchant statements to make sure you're getting the best for your business.


Professional service firms started commonly accepting credit cards around the same time consumers and businesses started moving away from checks and toward electronic payments. This shift was uncomfortable for a lot of firms as it added new costs into their accounting models: credit card processing fees as an additional line item of overhead.

While credit card processing fees certainly are a cost of doing business, you might have more control over them than you think. My colleagues and I work with the accounting teams of many professional service firms to help them understand their merchant statements and identify opportunities to optimize the rates they pay on each card transaction.

The two numbers that matter most 

If you want to get a quick feel for whether you’re paying an appropriate rate overall, the two most useful numbers on your merchant statement are total sales and total fees. Total fees divided by total sales gives you your net effective rate (NER). Most firm merchant statements that we audit have a net effective rate around 3%. Here are the NERs for two monthly statements I looked at recently:

  • Total fees $2,395.81/Total sales $69,992.80 = 3.42% net effective rate
  • Total fees $7,556.91/Total sales $258,765.34 = 2.92% net effective rate

Identifying your NER is helpful, but it’s not quite actionable. You will want to dig deeper into your statement detail to uncover the areas that impact your overall merchant spend and assess which of those can be optimized for maximum profitability.

The often-missed opportunity to optimize

After I calculate a net effective rate, the next numbers I jump to are the charges and fees by card type. I see so many law firms overpaying because their processor isn’t using the tools that can optimize B2B transactions where Level 3 data is collected.

Level 3 data includes rich information about the purchase, making the transaction more transparent and reducing the risk and costs associated with fraud and default. For this reason, the interchange rates on these types of cards should be lower.

Take a quick look at the card descriptions on your latest credit card report. If you see words like “rate 1,” “EIRF”, “standard,” “CNP,” or “purchasing card,” your payment technology may not be able to process B2B transactions at optimized rates.

Then calculate your net effective rate and see what would happen if you shave off even half a percentage point. I'm betting you'll see a real impact to your bottom line. 

Make sure you're getting the best credit card processing rates.

Request a statement review

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