How To Proofread Your Merchant Services Residual Income Report in 30 Minutes

You happily receive your merchant services residual income report. You open it and look for the total amount you’re owed. Wait, wasn’t it supposed to be higher this month? You start looking through the details.

Confusion sets in.

You close it and tell yourself you’ll review it more closely next time.

Sound familiar?

Reading residual reports can be extremely confusing, and most salespeople would rather do ANYTHING other than crunch numbers in a spreadsheet. Verifying that you’re getting paid what you’re actually owed is critical though. That’s why I included proofing your residual reports in my previous post titled Three Tips for Selling Merchant Services Over the Holiday.

To make it less painful, I’m giving you step-by-step instructions.

What You’ll Need

To start, you will need the following:

  • Most recent residual reports
  • 5 random merchant statements for the same time period as the residual reports (choose merchants who process and have a monetary effect on your income, positively or negatively)
  • Current Card Interchange Chart and Payment Network Fee Schedule

Follow These Steps to Proofread Your Residual Reports

  1. Begin by identifying the total fees on the statements, and compare them to the collected revenues on your residual report. Do they match? Are all fees collected listed on the report? If the answer is no for either, make a note of the difference, but don’t act on these just yet.
  2. Now look at the interchange, dues, assessments, and network fees on the statement. Compare these to the interchange chart. Do they match? If not, what is the difference? Note any of these that occur, and look for consistency. For example, is every assessment fee marked up by the same percentage? Do NABU, APF, and other monthly fees have the same differential?
  3. At this point, you need to calculate the monetary difference of any identified mark up. Compare this total with any that had a difference in step #1. In other words, if you received credit for $1,885 in fees, but the statement showed $2,005, does this difference of $200 match the marked up fees? If so, you are not being paid for these other revenues. If the differential amount does not match the total amount of marked up fees, go back to your residual report and see what is listed for interchange costs. If the differential amount is included in there, you are not getting credit for the revenue.

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Watch this 30-minute webinar recording to see exactly HOW to proofread your residuals.

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How to Handle Bad Residual Reporting

The biggest challenge in proofreading residual reports is often the actual residual report.  The vast majority don’t provide sufficient information. Some won’t show interchange by merchant. Others will only show your income. If this is the case, you should reach out to your ISO partner and ask for the detail. If they squawk, just ask for the five random merchants you are reviewing. If they still refuse, it’s time to be concerned.

The key to any residual report, in fact anything in our profession, is transparency. The inability to provide that to a merchant has cost many a rep the merchant. It should be the same for you and your ISO partner. You should consider this a red flag.

Even if you trust your partner completely, remember that all humans make errors. Once you have completed the review of your sample, and have identified concerns, uncredited revenue, or anything else that stands out, reach out to your ISO partner. Ask for an explanation.

If the explanation is lacking, let them know about your concerns. Remember it’s your money. You have a right to ask questions and expect answers. If the answer is confusing, ask for clarification.

This exercise shouldn’t take more than 30 minutes. At best, it’s worth the confidence that accuracy can give you. At worst, you may find there are errors that either must be explained, corrected, or (if not correctable but involve revenue not credited) finding a new home.

About Author

Jeff Fortney

Jeff Fortney

VP, ISO Channel Management

Jeff Fortney has 25 years of experience in payments, with a focus on helping ISOs and agents grow their portfolio. His experience encompasses all forms of payments. He has served on various industry committees and boards and is also an author in various trade publications. He and his wife of 40 years live in Plano, TX.

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