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is being collected, determining whether the merchant is being billed according to the Schedule A section of their contract
is your first objective. Karawadra urges agents to pay close attention to what fees have – or have not – been charged, and
how that parallels to the Schedule A. “Errors between the merchant statement and the Schedule A are more common than
most agents expect,” she continued. Most agents take expert care to ensure completion and accuracy when submitting
a merchant’s paperwork. Then, they work hard to get the merchant programmed and ready to accept transactions.
Karawadra believes many agents think it is okay to sit back and wait for the residual payments to start coming in at this
point, but she advises them to double check these payments for accuracy.

“Countless times, I’ve found the processor is not charging the merchant the fees spelled out in the Schedule A,” Karawadra
continued.

Karawadra often sees errors in the pin debit interchange area where this fee gets overlooked and doesn’t get billed to the
merchant. She warns agents to watch for this kind of activity, because the agent will have to absorb these fees, and it can
drastically reduce their residual payouts. Another common scenario relates to pass-through fees. If they are built into a
contract, these fees should be passing through to the merchant billing; not coming out of an agent’s residual commissions.
Do a thorough audit
It goes without saying you will need access your merchant’s statements, so it is best to make this request at the onset of
every relationship. Many ISO portals have comprehensive information on the merchant’s transactions, but may not have
a breakdown of the fees, so comparing to the merchant’s actual billings is always best. To audit your payouts, you’ll need
to routinely reconcile between these statement and your residual reports, and Karawadra encourages you to dig deeper
when you don’t see the level of residuals you anticipated. She offers the following steps you can go through to conduct a
thorough audit:
• Review each merchant’s signed Schedule A and keep a spreadsheet of what they should be billed by the
processor.
• Double check your merchant is set up on the pricing plan you intended. For example, if you asked for a three-
tier pricing schedule, but on the statement they are being billed on a pass-through interchange schedule, you
will want to address this error right away.

• Check the merchant statement to ensure all transaction fees are being billed correctly, including pin-debit
interchange fees, and any other fees documented in the Schedule A (see more below).

• Analyze your residual report to verify:
◊ The transaction count and volume matches with the merchant statement
◊ You are being charged the negotiated rates stated in your agent Schedule A
◊ The authorization fee is accurate. For example, if your authorization fee is supposed to be $.08, and the
report shows you are being billed $.10, you have a problem.

• Go through all the major fees for each contract, including:
◊ Statement Fee
◊ Authorization fee
◊ Pre authorization fee
◊ AVS fees
◊ Account on file fee
◊ Risk Monitoring Fee(normally in basis points)
◊ Debit/EBT Authorization fee
◊ Batch fee
◊ Voice Authorizations/VRU
◊ Online Reporting fee
◊ PCI fee
◊ Chargeback

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