7 Avoidable Fees Hiding in Your Merchant Account Statement
Credit Card Processing

7 Avoidable Fees Hiding in Your Merchant Account Statement

by Ben Dwyer

September 30, 2025

Merchant account billing statements can be confusing, but it’s even worse when you have avoidable fees hiding among the rates.

For most business owners, reviewing merchant agreements and monthly billing statements isn’t the top priority. And even if it was, the statements are often confusing, with dozens of interchange categories, assessment fees, and more. A lot of business owners therefore just focus on a few key variables: their rate and the total cost. But that can miss important areas for saving. And with processing costs taking a bigger bite of your bottom line, it’s important to maximize those savings.

Many avoidable fees are easy to overlook because they’re small or are charged inconsistently. But they add up quickly, often to the tune of hundreds or thousands of dollars per year. In this article, I’ll go over 7 (usually) avoidable fees that might be hiding in your processing statement.

AVS Mismatch Fee

What it is: AVS, short for Address Verification Service, is an anti-fraud tool used to confirm that the billing address a customer enters for an online purchase and the address on file with the credit card company match. When they don’t match, the business will get a mismatch code.

Why the fee gets charged: AVS is designed to prevent fraud during card-not-present transactions. If the system returns a mismatch code, some processors charge a fee. Other processors charge a fee if you process the transaction despite a mismatch.

What to look for: On your statement, check for terms like “AVS mismatch” or “AVS failure.” Keep in mind that different processors will name fees different things.

How to avoid it: Look for a processor that doesn’t charge for AVS mismatches, or only charges if you proceed with the transaction. If mismatches are frequent, consider reviewing your checkout process to determine if it’s confusing or sending data incorrectly.

Fallback Fees

What it is: “Fallback” is a term in credit card processing relating to EMV chip cards. This fee is for processing EMV chip cards using the magnetic strip instead.

Why it happens: If a card cannot be processed as a chip card (either because your chip reader is not working or the chip itself has a failure) it will “fall back” to authorizing via magnetic strip. If the chip can’t be read properly and the card instead gets run through the magstripe reader, you’ll incur a fallback fee.

What to look for: Check your statement for anything related to EMV, such as “EMV fallback” or “fallback trans fee.”

How to avoid it: Make sure your terminals accept chip cards and are functioning. Promptly repair or replace any broken or malfunctioning chip readers rather than switching over to magnetic strip acceptance.

PCI Non-Validation or Non-Compliance Fees

What it is: A monthly or annual fee charged when you haven’t validated PCI compliance.

Why it happens: Business owners are required to complete an annual PCI Self-Assessment Questionnaire (SAQ) to validate PCI compliance. If you don’t complete that questionnaire, you’ll incur non-compliance fees, even if you’re complying with the PCI guidelines.

What to look for: You could see this show up on your statement as “PCI non-compliance fee,” “PCI non-validation fee” or other variations on those terms.

How to avoid it: Become PCI compliant by submitting the appropriate SAQ. This is just a good idea anyway, as PCI compliance deals with security and data protection so that you don’t run into an expensive and complicated security issue.

PCI is a complex topic, but we have a range of articles available to help. Click the links above to learn more. Be sure to contact your processor for assistance as well.

Batch Fees

What it is: A small fee each time you settle (or “batch”) your daily credit card transactions.

Why it happens: When you submit a batch to your processor for settlement, they charge a fee for the data transfer.

What to look for: You’ll often see this called a “batch header fee” or “daily batch fee.” It may also be listed as a settlement fee.

How to avoid it: While the amount is small, and there’s usually no way to avoid it completely, I’m including it here because you CAN avoid multiple batch fees by only batching once per day. Some businesses batch multiple times a day, which means multiple fees.

IRS Reporting Fees

What it is: A fee related to IRS-required 1099-K reporting a processor does for merchant accounts.

Why it happens: Processors are required to report merchant account sales to the IRS. Some pass on the administrative costs associated with that reporting to you.

What to look for: “IRS fee,” “Regulatory Product Fee” or other IRS-related terms.

How to avoid it: IRS reporting fees aren’t actually a fee that the IRS imposes, but the name can make it sound like it is. Look for a processor that doesn’t charge this to you.

Voice Authorization Fees

What it is: A fee when you call to get a manual authorization for a transaction.

Why it happens: Most commonly, voice authorization is used if a transaction triggers a fraud warning in your system, requiring an authorization from the card issuer.

What to look for: Any fees labeled with “manual auth” or “voice auth.”

How to avoid it: Make sure your terminals are functioning properly and authorizing automatically. Don’t use voice authorization procedures unless necessary or prompted by your system. A few of these charges aren’t bad, but since they can start around 50 cents per authorization, a lot of them will add up fast.

Inactivity Fees

What it is: A fee charged when you don’t process any transactions. When combined with monthly minimums, it can be a double-whammy. (And leave you paying for a service you’re not even using!)

Why it happens: Most commonly, inactivity fees happen to seasonal businesses that close for part of the year.

What to look for: Anything on your statement labeled with “inactivity fee,” “shutdown fee,” etc.

How to avoid it: If you run a seasonal business or expect to not process transactions in some months, look for a processor that offers low or no-cost seasonal shutdown. Some processors still charge, but you can usually minimize the fee.

How to Check For Avoidable Fees

Since merchant statements are often so complex, it can be tempting to just skip over the actual fees. However, if you’re looking to save money on processing, questioning every fee, especially new or inconsistent fees, will help. Ask your processor why the fee was charged, who charges it, and how you can reduce or eliminate it. In some cases, such as PCI non-compliance, your processor may be able to help you get rid of it entirely.

Get used to reviewing your statement every month. This is the best way to spot new charges or higher costs before they add up to real money. Sudden jumps in your cost can indicate new fees, rate changes, or other shifts that warrant further review.

 

You can also compare your statement to quotes from other processors to see where your current pricing falls. Sites like CardFellow offer a private quote comparison marketplace, so you can easily compare apples to apples. (And if you need help, we’re happy to lend a hand! Simply sign up for your free CardFellow account to get started.)

Some payment processing fees are just a fact of business, but others are avoidable or can be minimized. By checking your statement for these avoidable fees, you’re in a good starting point to getting the most competitive processing solution for your business. If you’re unsure about your current fees, or think you might be overpaying, click the link above to see real pricing with no obligation.

 

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