The challenges of validating merchant service charges – Part I

The world of payments is evolving rapidly. There are constant changes in the market when it comes to regulation and the pricing of card payments. It can be difficult for organsiations who accept card payments (merchants) to fully understand how charges are applied when their customers pay for goods and services using debit and credit cards.

Merchants face numerous challenges when validating merchant service charges applied by their merchant card provider (acquirer). Getting access to transaction level information is key. Merchant acquirers will typically issue monthly fee statements by email and/or post which contain a summary of transaction information for that month. The problem for the merchant is that summary statements may not contain sufficient transaction level detail to allow merchant service charges to be validated accurately.

In certain cases monthly summary statements are issued in PDF format which increases the burden on the merchant to manually process transaction data when attempting to analyse their charges.

Ideally the information should be presented in spreadsheet format which will enable the merchant to manipulate the transaction data with greater efficiency. Some merchant acquirers provide their merchant clients with access to their transaction data via an online portal. In this case the merchant is able to download more detailed transaction information related to their customers’ card payments which can help them to validate merchant service charges with greater accuracy. However, it is unlikely that all the details that are necessary to fully validate the charges are accessible through the portal. The merchant must then request the missing information. Knowing precisely what data to request is a different matter.

Interpreting and validating merchant service charges can be complex as there are different pricing models available to merchants. Furthermore, there are a multitude of different factors that determine what charge is applied to each individual card transaction. These topics will be discussed in more detail in my next blog post.