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How do I add the credit card processing fee to an invoice without being charged the processing fee for the base amount AND the processing fee?

For example, my client owes $5,000;  the c/c processing fee is 2.9%, or $145.  I want to pass this fee on to my client so I create an invoice for a total of $5,145 (Line 1:  Service =$5,000 and Line 2: Credit Card Processing Fee = $145).  In this scenario, will I be charged a 2.9% fee on the total of $5,145.00?

Solved
Best answer 03-08-2019

Accepted Solutions
Established Community Backer ***

Re: How do I add the credit card processing fee to an invoice without being charged the processin...


@KrisG9988 wrote:

Thank you for your response!  However, I don't think it answers my question.  I know how to create the invoice with the fee, what I'd like to know is if the processing fee, that I'm going to be charged, is going to apply to the total invoice amount of $5,145?  So now the fee will be $149.21 ($5,145 x 2.9%), instead of the original $145 ($5,000 x 2.9%).  If so, I wouldn't receive the full $5,000, I'd only receive $4,995.79.  I know it's a small difference but in time it adds up. 


The calculation is  A / (100 - fee)  * 100, where A is the amount you want to receive 

 

So 5000 / 97.1 * 100

= 5149.33

28 Comments
QuickBooks Team

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Hi there, @KrisG9988.

 

Thanks for posting here in the Community. I'm here to help share some instructions about adding the credit card processing fee on your invoice. 

 

To add the credit card processing fee on your invoice, you'll just need to add another line on the transactions field so you can enter the details and amount. 

 

Let me walk you through the steps:

  1. Click on the Plus icon.
  2. Select Invoice.
  3. Select the name of the Customer.
  4. Under the transaction details, enter the original invoice amount.
  5. Add another line and enter the credit card processing fee amount and indicate it on the description field. Make sure that the account used is under bank fee expense.
  6. Then Save.

I've attached some screenshots below for your reference:

invoice1.PNG invoice3..PNG

 

Also, I've included here some helpful articles that you can check out about customizing sales forms in QuickBooks Online for your future use.

That should do it!.

 

Please let me know if you have any other questions with adding credit card processing fee. I'll be around to keep helping. Have a great weekend!

Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Thank you for your response!  However, I don't think it answers my question.  I know how to create the invoice with the fee, what I'd like to know is if the processing fee, that I'm going to be charged, is going to apply to the total invoice amount of $5,145?  So now the fee will be $149.21 ($5,145 x 2.9%), instead of the original $145 ($5,000 x 2.9%).  If so, I wouldn't receive the full $5,000, I'd only receive $4,995.79.  I know it's a small difference but in time it adds up. 

QuickBooks Team

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Thanks for explaining further what you're trying to accomplish, @KrisG9988.

 

Allow me to provide some clarification about your credit card processing fee concern. 

 

If you are using the merchant services when processing payments for invoices, being able to add the credit card processing fee for your customer's invoice isn't applicable. This is because the credit card processing fees are charged every time you do a transaction. 

 

Yes, you are correct. When you process an invoice for $5145 (invoice amount and credit card processing fee) you'll still be paying another 2.9% which would be a total of $149.21. That said, you won't be able to receive the full invoice amount.

 

To learn more how credit card processing fee works in QuickBooks, please check out these articles: 

This should get you moving today.

 

Please let me know if you have more questions about this concern. I'm always here to help. Take care!

Established Community Backer ***

Re: How do I add the credit card processing fee to an invoice without being charged the processin...


@KrisG9988 wrote:

Thank you for your response!  However, I don't think it answers my question.  I know how to create the invoice with the fee, what I'd like to know is if the processing fee, that I'm going to be charged, is going to apply to the total invoice amount of $5,145?  So now the fee will be $149.21 ($5,145 x 2.9%), instead of the original $145 ($5,000 x 2.9%).  If so, I wouldn't receive the full $5,000, I'd only receive $4,995.79.  I know it's a small difference but in time it adds up. 


The calculation is  A / (100 - fee)  * 100, where A is the amount you want to receive 

 

So 5000 / 97.1 * 100

= 5149.33

Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

That’s what I ended up doing. We just started excepting c/c payments so I don’t know how QB handles the processing fee.  Thanks!! 

BNC
Frequent Explorer *

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Has this question been answered correctly yet? There should be a clear explanation of how to apply surcharges in Quickbooks for credit card processing without incurring a higher fee from Merchant Accounting. I have Quickbooks Desktop Premier 2018, not Quickbooks Online.

Moderator

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Hello there, @BNC.

 

Charging customers a fee for credit card payments are currently prohibited in 10 states—Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.

 

If your business operation is located in these states, it would be best to consult a tax adviser to get suggestions on how to record the customer charge.

 

However, you can charge a convenience fee to your customers who use credit cards rather than another form of payment that's standard for the business.

 

Here's how: 

  1. When creating an invoice, add a separate line item for the convenience fee.
  2. Click the ITEM CODE column, then choose Add New.
  3. Under the TYPE drop-down, select Other Charge.
  4. Enter the Item Name.
  5. In the Amount or % field enter a flat amount if you're charging a fixed amount. Otherwise, enter a rate with a percent sign if you're charging a specific percentage on the invoices.
  6. Fill all necessary fields then click OK.

To learn more recommendations about accounting credit card fees, you may refer to this blog for details: Everything You Ever Wanted to Know About Credit Card Fees

 

Just scroll down and look for Should You Accept Credit Cards In Light Of All The Credit Card Fees? and Tips For Offsetting Credit Card Fees sections.

 

Keep me posted if there's anything else you might want to ask concerning QuickBooks. I'll be around to help. Have a great day ahead. 

BNC
Frequent Explorer *

...

 
BNC
Frequent Explorer *

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

This explains how to record a deposit, not how to add a surcharge to an invoice without increasing the fee to process a credit card.

QuickBooks Team

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

I can clarify on how adding surcharge will affect the processing fee, BNC.

 

The fee is a percentage of the total amount of the invoice. If you add a surcharge, that will add to the invoice amount which will also be subject for the processing fee. For this reason, we're unable to add it without causing to increase the fee.

 

You can post back if you have other questions.

Senior Explorer **

Re: How do I add the credit card processing fee to an invoice without being charged the processing fee for the base amount AND the processing fee?

I'm pretty new to the QB Community and in general, however, in reviewing this message, I am thinking about just charging a standard 3% fee to all our credit card customers.  So, if you need to get $5000 for a service in the original example, charging the 3% would be a fee of $150.  Then, the merchant service charges you 2.9% on the $5,150 =  $149.35.  Therefore, you would end up with a net $5,000.65.  We currently take all kinds of cards and they each charge differently.  But over the course of the month, it all averaged out to about 2.8% overall.  So, yes, I might make a few cents on the dollar, but if you tell all your customers a simple 3% fee will be applied to all card transactions, then you won't have to try and figure out a different amount each time, and it makes up for the processing fee for you fees, if you follow me.  This is what I'm thinking about doing myself.  If anybody has any opposition or comment that this would not be a good idea, please feel free to share.  thanks.

Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processing fee for the base amount AND the processing fee?

The issue I am finding with even calculating the fee and adding it as a line item on the invoice is that you need to know before making the invoice how that customer is going to pay.  I find some customers usually pay with check, but because the option is on the invoice, they sometimes pay via credit card.  So I cannot determine ahead of time exactly how the customer is going to pay.  What would be so great would be if we send the invoice as normal, but when a customer pays via credit card, have the payment page add the fee at that time, then take your fee amount and pay us the invoice amount.  Simple and headache free!

QuickBooks Team

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Hello trinitycustomgear,

 

I appreciate for posting here in the Community. I'm here to assist you with your concern about the customer credit card payments in QuickBooks Online.

 

I'm personally taking note of your request regarding having an option to add the fee during the payment processing to save time. In the meantime, you can record the fees manually when making a deposit from Undeposited Funds.

 

Here's how:

 

  1. Click the Plus sign.
  2. Select Invoice,
  3. Enter necessary information.
  4. Click Save.
  5. Click Receive payment in the upper-right corner.
  6. Below Deposit to, select Undeposited Funds and click Save and close (see screenshot below).
  7. Click the Plus sign again, and click Bank Deposit.
  8. Put a check mark on the payment.
  9. Below Add funds to this deposit, add the fee.
  10. Click Save and close.

Here are some screenshots for your visual guidance:

 

 

 

To stay up to date to new features and options, I also recommend visiting our QuickBooks Blog website.

 

Feel free to reach out to me for any additional questions or concerns about the fees. The Community will keep an eye out on your response.

Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Hi Kris,

 

I've ran into a similar problem - I'd like to bill my customers for the processing fee as part of the transaction being processed. I.e. have them pay for the fee directly. Did you ever figure out how to pass that onto them properly? Do you mind reaching out to me to let me know what you ended up doing? [email address removed]

 

 

Thanks!

 

Sam

QuickBooks Team

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Greetings, @2652nhalsted.

 

You'll need to create an income account to associate with the processing fees. Let me add more details about this and help you from there.

 

Normally, when you pay for processing fees, you need to associate it with an expense account. But if you choose to let your customer pay for the processing fees, you need to associate an income account.

 

To create an income account, you can follow the steps below:

  1. Hover our mouse on Accounting from the left panel.
  2. Choose Chart of Accounts.
  3. Click on New.
  4. Under the Account Type drop-down, choose Income.
  5. Select the Detail Type.
  6. Enter the Name.
  7. Click on Save and Close.

To associate the income account to your processing fees, kindly follow the steps below:

  1. Click on the Gear icon.
  2. Choose Accounts and Settings.
  3. Select the Payments tab.
  4. Click on Chart of Accounts.
  5. Under the Processing Fees drop-down, choose the income account you created.
  6. Click on Save.

For further guidance, you can read this article: Choose Where to Record Payments and Processing Fees for QuickBooks Payments.

 

Feel free to let me know if you have any other questions or concerns. I'll only be a post away.

Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

 
Moderator

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Hi there, @vdavis0213

 

The fees you pay cover the transaction processing and depositing funds in your account. Currently, the option to avoid the 2.9% charge is unavailable. It is a default amount automatically charged to your account upon doing the transaction. 

 

Though this is fixed, you may refer to this blog for recommendations on how to keep the credit card processing fees low, as well as other tips and tricks to manage and track payments: Everything You Ever Wanted to Know About Credit Card Fees.

 

In case you want to charge your customers automatically on a regular schedule that you set, you can check out this article to create a recurring credit card payment.

 

Fill me in if there's anything that I can help you with. Have a great rest of your week.

Highlighted
Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

According to this Dallas News article from Nov 2018, Texas overturned the ruling.

https://www.dallasnews.com/news/watchdog/2018/11/21/texas-law-banning-surcharges-credit-card-payment...

 

This article from 2 days ago states the same thing. 

"Texas
As of 2018, Texas businesses can surcharge. In Rowell v. Paxton, the court determined that surcharging is considered protected speech under the First Amendment. Thus, the Court ruled Texas’ “no surcharge” law unconstitutional.

 

CardX’s Razi tells CardFellow, “With this legal victory, Texas joins California and Florida as states where “no-surcharge” restrictions have been declared unconstitutional. Now, Texas businesses have the option to pass on the fee when their customers choose credit cards for convenience or rewards.”"  

https://www.cardfellow.com/blog/checkout-fees-charging-credit-card-fees-to-customers/

 

However the law is confusing to interrupt and still states that business can't charge a fee. Contact an attorney to clarify. 

Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Actually, it's legal in TX now to charge the customers the fee. The law was deemed unconstitutional in 2018. :)

Not applicable

Re: How do I add the credit card processing fee to an invoice without being charged the processing fee for the base amount AND the processing fee?

Yes!  This is exactly what I am looking for also.  Pleae hurry Intuit.

Experienced Member

Re: How do I add the credit card processing fee to an invoice without being charged the processing fee for the base amount AND the processing fee?

SAME HERE

QuickBooks Team

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

It's great having you here, @sdfghjklfghjkl,

 

I understand how handy it is to directly include processing fees on invoices. While the option is currently unavailable, I recommend following the suggestions provided by my colleagues in this thread.

 

We don't have the timeline on when our engineers will release new features. Rest assured, this feedback is forwarded to the Development team for consideration. They are constantly working to meet our customer's needs and are taking note of every request we submit to them.

 

To stay updated on all QuickBooks news and product updates, you can view the details through here: QuickBooks Blog.

 

If there’s anything else that I can help, simply click the Reply button below. I’ll be right here for you. All the best.

Experienced Member

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

Sorry, I am latching on to this thread.....

Is there a way to make it so the customer assumes responsibility for the transaction fees whether through a merchant card of ACH when they go to pay their bill through an online invoice?

QuickBooks Team

Re: How do I add the credit card processing fee to an invoice without being charged the processin...

It's nice to have you here, @lookitserin.

 

You can add the ACH transaction fee in your invoice to assume customers responsibility for the fees. Let me walk you through the process.

 

You'll just need to enter the ACH transaction fee to another line on the transaction field. But to enter the right ACH transaction fee amount, you'll need to manually calculate the fee amount first as shown in this thread.

 

Here's how to add transaction fee:

 

  1. Click the Plus (+) icon.
  2. Select Invoice.
  3. Choose the customer.
  4. In the first line item, enter the original invoice amount.
  5. In the second line, enter the ACH transaction fee. Make sure that the account used is under bank fee expense.
  6. Click Save and close.

In case you want to process an ACH bank transfer from a customer, you can check out this article for your future reference: Process an ACH Bank Transfer from a Customer.

 

Feel free to leave a comment below if you're referring something else or if you have any other questions. Have a good day!

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