Greetings Jason!
Thanks for bringing this up — you’re absolutely right to be frustrated, and you’re not alone in seeing this kind of timing issue. I want to walk through a few key points with you and then give you some practical next steps as a certified ProAdvisor.
What we know about returned item / NSF fees
When a bank or payment processor tries to withdraw funds and the account doesn’t have sufficient available funds, a “returned item” or “non-sufficient funds (NSF)” fee may be charged.
According to the Consumer Financial Protection Bureau (CFPB), banks that charge “Returned Deposited Item” fees must disclose them and they are typically between about $10-$19 in many cases.
A “deposit” becoming available to you does not always mean it has fully cleared or that all funds are truly available for withdrawal, especially if there is a hold, or the payment flow is delayed. In other words, timing and “available balance” matter a lot.
Financial institutions’ fee schedules for insufficient funds or returned items are based on the available balance at the time the item is processed, not necessarily the “posted” balance the customer sees.
Why you may be seeing the issue you described
From your description:
It sounds like the payment from your customer was not yet fully deposited or settled before QuickBooks Online (QBO) or the payment processor attempted to withdraw the transaction fee.
Because the funds weren’t yet available (or posted) in your operating account, the fee withdrawal may have triggered a returned item due to insufficient available funds.
Then the second attempt without confirming the available balance caused the second return, which led to the repeated $25 fees.
The front-line customer support route is not resolving this because this involves timing of settlement between QBO Payments + the bank + availability of funds — it’s a bit above the normal script.
What you can do to escalate and resolve
Here are some next steps:
Collect documentation
- Get the date/time stamp of when the customer’s invoice payment was “received” by QBO Payments (or the processor).
- Get your deposit posting date/time to your bank account.
- Get the date/time when the fee withdrawal was attempted.
- Capture screenshots or PDF of the returned item fee(s) from your bank.
Having this timeline will help you show the gap between deposit and fee withdrawal.
Contact the payment processor and QBO support
Ask QBO Payments or the Merchant Services team to investigate the settlement timing and whether the fee withdrawal was triggered before funds were posted.
Ask for the specific reason the fee withdrawal was attempted and why the account lacked available funds at the moment of withdrawal.
Ask for the fees to be waived based on the fact that the payment processor initiated the withdrawal before posting the deposit.
Contact your bank/accounting operations
Confirm with your bank what “available balance” was at the time of the attempted fee withdrawal.
Ask for disclosure of the bank’s internal timing of settlements and holds.
See if the bank is willing to waive the returned item fee because the withdrawal attempt was initiated by the processor (not by negligence from your end) and the settlement timing was outside your control.
Adjust your practice going forward
Until this is sorted, you may choose to hold payments or wait for the deposit to fully post before allowing auto-withdrawal of fees.
Monitor the available balance (not just posted balance) to ensure you have sufficient cover.
Consider enabling alerts for low available balance so you catch timing issues early.
Bottom line
Yes — the timing between deposit of funds and initiation of fee withdrawal matters. If QBO (or its processor) attempted to pull the fee before the funds were available in your account, that is a valid basis to contest the returned item fees. You should definitely push for an escalation to Merchant Services and your bank. Use your documentation and timeline to make a strong case. You are entirely justified in seeking resolution.
If after escalation you still don’t receive a satisfactory answer, you could also consider filing a complaint with the CFPB or your state banking regulator — though in many cases a constructive resolution happens once you present the facts persuasively.
I hope this helps you get traction and a waiver of the fees.
—Regina Pitts – Advanced Certified QuickBooks Online ProAdvisor
