Processing Fee Audit: How to Check Every Line Item

Why an audit, not a glance at the total

A statement total can look roughly the same month after month while the parts underneath it change. Card networks update interchange and network fees on published schedules, usually in April and October. Processors can add or reprice their own line items with notice, and that notice is often a statement message that nobody reads. When volume grows, a new fee can hide inside a bigger total. An audit ignores the total at first and asks one question of every line: is this charge in my agreement, at this price? Only then does it add the lines back up into an effective rate, which is total fees divided by total card sales for the period.

Background reading: Effective rate: how to calculate what you really pay · Network fee changes: track your effective rate

What to gather before you start

You need three things. First, recent monthly statements from every merchant account, ideally a full quarter so one unusual month does not mislead you. Second, the signed merchant agreement and its pricing schedule, plus any amendment or rate-change notice you received since. Third, the processor's description of how it prices you: interchange-plus, flat rate, tiered, or a zero-fee or dual pricing program. If you cannot find the pricing schedule, ask the processor for a copy in writing before you go further. An audit without the contract can only tell you what you pay, not whether it is what you agreed to.

How to check each line

Work through the statement one fee at a time and put each line into one of two groups. Pass-through costs are set by the card networks and issuing banks: interchange, network assessments and network access fees. On interchange-plus pricing these should appear at cost and follow the networks' published schedules. Processor charges are set by your provider: the markup in percent or basis points, per-transaction fees, and fixed fees such as statement, batch, PCI, annual or monthly minimum fees. For each processor charge, find the matching line in your agreement and compare the price. Mark three things: charges that are not in the agreement at all, charges priced higher than the agreement says, and charges that first appeared after you signed. On flat or tiered pricing, also check how many transactions were billed at the higher non-qualified or mid-qualified rates, because that mix can move your cost without any rate changing.

Line-by-line help: How to read your statement and spot fees to question · How to read a card processing statement

What changes for multi-location and enterprise teams

Larger businesses usually have more than one merchant ID, sometimes with more than one processor, and the combined effective rate can hide a single location priced on old terms. Audit each merchant ID on its own first, then roll the results up. Compare the same fee line across locations: if one store pays a fee the others do not, ask why. Split the effective rate by card type and by channel, because a location with more keyed or online sales will cost more for reasons that are not a pricing error. Finance teams should also keep a simple register of every pricing notice received, so the next audit starts from a known baseline. Ownership matters as much as method: assign the audit to one person or team, or it tends to happen only when someone notices a problem.

For several locations: Effective rate by location and card type · Running payments across multiple locations

When to run it

The most useful moment is before your renewal notice window. Many merchant agreements renew automatically unless you give notice within a set period, so check the term and the notice clause first, then schedule the audit ahead of that date. After that, a quarterly check on the previous month's statement is usually enough to catch new lines early. If your processor is sold or merges with another company, run an extra audit on the first few statements under the new owner.

Contract timing: When does your processing contract renew?