The Statement “Analysis” Scam Costing You Thousands in False Promises

a depiction of an angry business owner looking at an expensive merchant account statement

How The Statement Analysis Con Starts

When shopping for a new merchant account, you are likely to encounter a salesperson from a competing credit card processing company who wants to offer you a “free statement analysis.” On the surface, the offer sounds great. They are telling you that they can save you money on processing costs and show you how much you will save in comparison to your current credit card processor. What a great deal! Or is it?

Agreeing to a free statement analysis from a credit card processing company is risky for a few reasons:

  1. Wolf in Sheep's Clothing: Often, it's the worst processors that utilize the “free statement analysis” tactic to lure unsuspecting business owners into a high pressure sales gambit. In this common scenario, you unwittingly hand over your statement to scammy salesperson who then returns a cost comparison with your current processor that saves you a huge amount in fees. But there's a catch; His manager says that you have to sign up today or the offer is off of the table. You don't want to lose such a great deal, so you sign the application without reading the fine print. A few months go by and the fees are actually more expensive, plus the customer support is awful. You try to cancel but that's when you find out you signed a contract that is going to cost you thousands to get out of. Now you're stuck with them for three more years, and they keep jacking up your fees the whole time. It's a nightmare that countless business owners have experienced, and a situation that is completely avoidable by never sharing your statement with a salesperson who is trying to get your business.
  2. Smoke and Mirrors: A shady processor's goal is to show you a carefully manufactured side-by-side report demonstrating savings over your current processor's costs. These reports are rarely an accurate representation of your actual processing costs, nor are they a true prediction of the costs you can expect by switching services. In most cases, the cost comparison you receive is a rough, ballpark estimate at best.
  3. Tipping Your Hand: When you send your statement to a processor, you may be unintentionally revealing sensitive information about your business that can be leveraged against you during pricing negotiations. Keep your processing data close to your chest. You don't want them to know if you are holding aces.
  4. Imposter Syndrome: When a prospective processor sees how your current processor is assessing your fees, you give them everything they need to manipulate the data in their favor. Do you know the difference between Interchange-plus pricing and tiered pricing? Would you be able to tell if they are comparing apples to apples across your fees? They will be paying close attention to your questions and answers as you discuss the cost comparison to see if you actually understand what you are looking at. Experts can always spot an imposter, so don't risk looking like one by handing your statement over to them.

Credit card processing companies thrive on the complexity of rates and fees. They have no incentive to help you truly understand how much you could actually be saving.

Get a True Understanding of Your Processing Costs

If you want an honest analysis of your processing costs and where you can save, the best approach is to obtain an independent “Statement Audit” from an expert who is not selling credit card processing services. A Statement Audit is different from “statement analysis” because it is not comparing your current fees with another credit card processor's. A Statement Audit compares your current fees against the wholesale cost of accepting credit cards without any markups or junk fees. It breaks down every fee and markup to identify how much profit your processor is making from your merchant account.

How a Statement Audit Works

A Statement Audit reveals everything about the underlying card network costs as well as the fees added by your processing company.

Step 1: Identify Non-Negotiable Costs

An audit starts by identifying the fees paid to the banks that issued your customers' credit cards, known as “Interchange.” Next, it segments the fees charged by the card brand networks (VISA, MasterCard, etc) called “Dues and Assessments”. These fees are the wholesale cost of the credit card processing ecosystem and cannot be negotiated.

Segmenting the network costs reveals markups by your processor that may by hidden via rate padding. In the audit example below, the processor was charging a wholesale rate of 0.53% on debit card transactions, which are regulated to be no higher than 0.05%. This means the processor was hiding an illegal 0.48% undisclosed markup that was costing this unsuspecting business owner nearly 10X more than it should have. Hidden rate padding is virtually impossible for the average business owner to detect because it requires cross-referencing hundreds of possible Interchange rates against vaguely defined statement charges.

visa interchange fee analysis table
A recent audit showing a business owners VISA Interchange fees.

2. Extract Processor Markups and Fees

Next, an audit will identify all of the margins and markups that a processor adds on top of Interchange along with listing all junk fees that can be negotiated or removed altogether, such as unnecessary monthly and annual fees.

This business owner was incurring over $2,000 in removable fees every month.

3. Compare Your Costs to Potential Savings

Lastly, an audit summarizes your current processing costs compared to what you could expect with an ethical, low-cost processor, or through renegotiation with your current processor if they are willing to come to the table.

A recent audit revealed that a business could have been paying nearly 50% less.

What's The Catch?

There always seems to be some kind of catch or trap in the credit card processing industry. If you are suspicious, you have every right to be. In most cases, you would be correct in believing that something like a Statement Audit is disguising an ulterior motive. This is why Statement Audits audits are not free. Because there is no other agenda by the auditor after completing it. You should expect to pay a few hundred dollars per statement, and it's wise to have more than one statement audited as not all fees occur on every statement. So, is paying hundreds of dollars for a Statement Audit a smart business decision?

The average business could cut its fees in half!

Every one of the hundreds of statements we have audited contained removable rates and fees. In fact, we have found that the average business is paying 47% more in processing costs than necessary. Over the last decade, we have uncovered millions of dollars in junk fees that businesses were blindly paying, completely unaware of how much they were losing in avoidable costs. Our findings have shown that businesses processing between $400,000 and $5,000,000 in annual credit card transactions are most at risk of grossly overpaying for credit card processing services, with many incurring excessive fees totaling tens of thousands of dollars annually. Nearly every audit we have done has justified its cost many, many times over.

A recent audit revealed potential cost savings into the six figure range.

Where to Get Your Statement Audited

We consider ourselves merchant account fee exterminators. Junk fee infestations make our blood boil. Nothing brings us more joy than spraying credit card processors with a heavy dose of transparency and watching them scurry into the shadows. Rest assured that our only goal is to help you understand where you can cut down your processing costs to the lowest they can possibly be.

Along with returning an audit, we also provide a short guide to understanding how to negotiate for the lowest processing rates and fees. Armed with these to documents, processors will have no chance of slipping anything by you.

Beware of Free Merchant Account “Cost Consultations”

Companies that are not marketing credit card processing services to you, but offer to audit your statement at no cost, will sell you down the river. First, their primary goal is to convince you to allow them to renegotiate your fees for a cut of the savings they achieve for you. Most of them want half of the fees they removed for a period of years! If you agree to their offer, the cost of auditing your statement will likely run into the thousands as they bill you for their portion. When you factor in their fee plus the time you spend paying them, you may only be saving about 10% to 20% as compared to your original costs. That's a savings you could achieve on your own with just basic know-how. It's better to pay upfront and avoid long-term obligations.

“Free” is rarely free in the merchant account industry.

What if you don't agree to let them negotiate on your behalf? At least you get a free audit, right? First, the audits these companies provide are intentionally vague. They don't want to give you all of the details on where you are getting overcharged because you could just take such information and do the negotiation yourself. They want you to believe that you need them – that it's all just too complex and that you can't achieve the savings on your own. Many will use high pressure sales tactics and continually market their consultation services to you until the end of time. Some are even known to sell your information to credit card processing companies who will endlessly call you and show up to your store. Avoid headaches and obligations by paying upfront for a Statement Audit.

How Much Does an Audit Cost?

Option 1 – Basic Audit / $199

With this option we will provide a basic breakdown showing you the following:

  • How much your fees exceed Interchange if your processing rates had no markups from your processor.
  • Which fees on your statement are “junk fees” that you processor adds to your processing costs with no tangible benefit to your business.
  • An estimation of the rates and fees you could achieve with excess markups removed.
  • A comparison of your current processing costs to what your costs would be with optimized rates and fees.
  • Get a free copy of our ebook, “Fee Sweep,” to teach you how to negotiate the lowest possible processing fees.

Option 2 – Detailed Audit / $799

A detailed audit of your merchant account statement includes all of the features of a Basic Audit. In addition.

  • Audit each transaction to ensure that they are being calculated at the correct Interchange rates. Some processors are notorious for adding hidden margins by calculating transactions at incorrect Interchange, we find this to be especially common with debit card transactions that have significantly lower Interchange fees.
  • We'll provide you a detailed report flagging any suspicious fees in your statement along with advice for renegotiating your processing costs.

Money Back Guarantee

Are you worried that you will pay for an audit only to find out that you have fair rates and fees? If our audit doesn't uncover enough in fees that it could pay for its own cost within six months of optimizing your rates and fees, we'll refund 100% of the cost of the audit back to you. We are so confident that most businesses are being overcharged that we refuse to charge our audit fee to the rare business that isn't.

Get Started Now

Ready to expose your processor's markups? Upload a merchant account statement below. All statements are treated with the utmost confidentiality and deleted shortly after the audit is completed. We will never share any information about your business with any other party. Get your cost-cutting started today.

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Reader Comments

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1 User Reviews

  • Mark Davis

    Red River CPAs

    Phillip’s dissection of my statement really stunned my. I assumed that we were paying too much, but I really had no idea how badly we were being screwed. Needless to say, it was egregious. I never would have understood to what degree had I not taken a chance to have my statement audited. Really. It’s like trying to read a foreign language. Thank you for opening my eyes!

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