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Charging Credit Card Fees for Online Payments

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  • Charging Credit Card Fees for Online Payments

    We are new to Quickbooks Payments. We charge our customers a fee for their use of a credit card to pay their invoices, in an effort to recoup the fees charged us by Intuit. But we are forced to charge those fees after the payment has been received. The result is compounding fees on fees if the customer continues to choose the option to pay online by credit card. I know that some platforms will automatically charge the customer's credit card the appropriate fee within the same transaction...in other words, Intuit would get their fee directly from the customer, rather than from us, if they offered this option to us. I don't see that as an option, though. Anyone have a good solution?

  • #2
    First thing is to check your state laws, there are some states where surcharging for using a CC is illegal.

    For those states that are ok with it, there is still a problem. You are required to put a notice on the store, the check out pages, and on the receipt it must specify the surcharge item and amount, that you surcharge for using a CC and how much, the law says a % is not legal. In addition to that, you are not allowed to surcharge when a debit or prepaid card is used at all. So if you are taking payments on line I don't see how you can know whether or not a card is a prepaid or debit card in advance.

    You would have to create a service type item called surcharge and include it on the invoice for the customer, that would mean you know in advance they will use a CC, and not a debit or prepaid card

    Best option is just raise your prices slightly, or accept that a merchant charge is just a cost of doing business.

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    • #3
      The more common way is to give a cash (or check payment) discount.

      Suppose an invoice was for $100 and was eligible for a cash discount of, say, 1 percent. The entries when a check for $99 as payment , the entries would be $100 credit against the invoice and an expense of $ 1 to the cash discount account, which would yield a net increase of one's bank account of $99.

      Don't forget that some also offer prompt payment discounts.

      Have you suggested to the client to see if he can get a credit card rate for collections and forwarding from somewhere other than Intuit
      Lorin Browning, Ph. D.
      Fellow -- National Tax Practice Institute

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