Does your Business Need an Oil Change?
Published on December 8, 2025 by Peter Hawkins
Just like vehicles, our businesses need regular maintenance to make sure that they are running smoothly. And one of the areas that deserves regular monitoring is payment card expenses. And, it is not something that requires an accounting degree to do. Here are three steps to managing your fees.
Step #1: Calculate Your Effective Discount Rate (EDR)
This is a monthly task, but it is very simple, only requiring your monthly statement, a calculator (if necessary) and a spreadsheet. Now do this simple division with that monthly statement:
EDR = Total Fees Paid divided by Total Sales = _______ %.
Make sure that when you calculate this the Total Fees Paid column is the sum of all the fees. Some statements break the fees into different sections, but don’t give you a total. Assuming, however, that you are able to find/calculate these numbers, I recommend setting up a spreadsheet in the following manner to track your payments and EDR.
| Month | Total Fees Paid | Total Sales | EDR |
| Jan | $2,287.84 | $155,949.72 | 1.47% |
| Feb | $2,309.97 | $157,463.02 | 1.47% |
| Mar | $2,572.90 | $183,056.21 | 1.41% |
| Apr | $2,723.08 | $183,888.76 | 1.48% |
Step #2: Compare Your EDRs
Now that you are tracking your EDR, there is one more simple division to compare the EDRs. Divide the EDRs by your reference month’s EDR for a monthly comparison of the EDR Change.
EDR Change = EDR (of Comparison Month) divided by EDR (of Reference Month) = _______ %.
| Month | Total Fees Paid | Total Sales | EDR | EDR Change |
| Jan | $ 2,287.84 | $ 155,949.72 | 1.47% | Ref Month |
| Feb | $ 2,309.97 | $ 157,463.02 | 1.47% | 100.0% |
| Mar | $ 2,572.90 | $ 183,056.21 | 1.41% | 95.8% |
| Apr | $ 2,723.08 | $ 183,888.76 | 1.48% | 100.9% |
| May | $ 3,063.99 | $ 184,774.61 | 1.66% | 113.0% |
| June | $ 2,998.98 | $ 179,774.00 | 1.67% | 113.7% |
| July | $ 2,672.88 | $ 156,444.03 | 1.71% | 116.5% |
| August | $ 2,803.99 | $ 165,387.24 | 1.70% | 115.6% |
At a glance, you will now see two items of note.
- The EDR, and the EDR Change, bounce around a bit as seen in the light gray section. As long as the bounce isn’t an overall shift (as seen in the dark gray), this is normal. The underlying costs of credit card acceptance change based upon the types of cards accepted and this causes the “jitter”.
- Looking at the dark gray section, we can see that “something” has happened. Our EDR Change has increased in a “step-wise” manner, and it has stayed there. This indicates that there has been a measurable increase in the EDR.
This brings us to our third step. How do we determine what caused the increase?
Step #3: Find the Cost Increase
There are a few reasons why your statement could show an increase in cost. Tracking them down, might not be so easy. So, my recommendation is that you call you current provider and ask them why your costs have gone up. And, knowing the right questions to ask can help expedite the process.
The typical reasons for an increase in cost, are as follows.
- Every April/May and October/November the card association reviews and sometimes changes the cost of some interchange categories. If it happened, did those changes impact your costs?
- Was there a new or increased passthrough fee from the card association added to your account? What was it?
- Was there a new or increased service fee from your credit card company to your account? What was it? What benefit do you get? Is it optional?
Lastly, after hearing the explanation, does it make sense? Does it fall into one of the categories above? If it does not, contact some of your colleagues. Ask them if they have had a similar increase in the same time span. Feel free to contact me and ask me any questions about your current rates. Collect data, compare it to your circumstance, and make a decision based upon facts. It’s your money!
