By George Mayo, co-founder of Swiped. Published October 26, 2026.
A merchant statement red flag is a fee line that is avoidable, inflated or hidden by the way the statement is laid out. Seven of them account for most of the overpayment we find in a free rate review.
Pull one recent statement and check it against this list. Each item takes a minute to find once you know the name it hides behind.
1. What is a PCI non-compliance fee?
A monthly penalty charged because a security questionnaire was never completed or a scan was never run. It is entirely avoidable. Completing the questionnaire removes it; a good provider walks you through it at setup.
2. What are non-qualified and mid-qualified downgrades?
Buckets on a tiered pricing plan where the processor moves ordinary transactions, such as rewards cards or keyed entries, to a higher rate. The processor decides what qualifies. Interchange-plus pricing removes the buckets and prints the markup instead.
3. What is an equipment lease line?
A monthly charge, often over several years, for a terminal that costs far less to own. Leases are usually non-cancellable and outlast the processing agreement. Owning or being placed on equipment at no cost is almost always cheaper.
4. What are batch, statement and annual fees?
Fixed charges for closing out the day, printing the statement and keeping the account open. Individually small, together they can add a full percentage point to your effective rate on a low-volume account.
5. What is a monthly minimum?
A floor on fees. If your processing fees for the month come in under the minimum, you pay the difference anyway. It punishes slow months and seasonal businesses.
6. What is an early termination fee?
A charge for leaving before the agreement ends, sometimes calculated as the remaining months of expected fees. Find the term and the exit cost before you compare rates with anyone, including us.
7. Why did the rate change without a new agreement?
Many agreements allow the processor to raise markup with a notice printed on the statement. Compare the effective rate, total fees divided by total volume, month over month. If it drifts up with no change in your card mix, the markup moved.
None of these require a new POS to fix. A free rate review marks every one of them on your own statement and shows the same volume on the cash discount program and on a standard account next to it.
About The Author
George Mayo co-founded Swiped and owns NJ POS Systems. He has worked in merchant services since 1994, when he and Mario Parisi founded Merchant Services Inc, which they built for twenty years and sold in 2014. He still reviews statements and quotes himself. More about the founders.
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