How do I credit the right customer, when Quickbooks misapplies a credit card payment to "Other Customer"?

Perhaps, you are referring to a different Quickbooks version.  My Quickbooks Desktop Pro 2017 does not have a create icon.  That aside, it would appear that there is no either/or solution, because your instructions seem to indicate the payment application process requires that I first make a journal entry, meaning it's a 2-step process.

If I have misunderstood something, please let me know. 

I think it would be a good idea to include a provision to unapply a credit card payment, if posted to the wrong customer's account.  It should be a very easy process, but apparently it is not.  This only happens with credit card transactions process through the Merchant Services Deposits interface, and it would not be a problem with any other form of payment.  It appears that if I try to void the transaction, you will return the money to the cardholder's account, and we simply can't have that take place.

And now I have a new problem.  When trying to make the journal entry you described (a credit to accounts receivable under one customer and a debit to accounts receivable under another customer), Quickbooks tells me I cannot use more than one A/R account in the same transaction.

If I credit undeposited funds, I end up with the following in my A/R aging, which I cannot accept, as well.

Please offer a solution that does not create a new problem.

Hi, carldscott.

You may want to set up or create a Clearing account and use it when you create a journal entry.

Here's how:

1. From the Lists menu, select Chart of Accounts.
2. Right-click anywhere in the Chart of Accounts, then select New.
3. In the Add New Account window, select the Bank radio button. While you can choose from several types of accounts, the best is a bank account because of the following reasons:
   • You can pay into a bank account via Receive Payments or Make Deposits.
   • You can payout of a bank account via Write Checks or Pay Bills.
   • A bank account appears on the balance sheet and on the statement of cash flows to balances and changes in balances.
   • To allocate expenses to overhead or class using a zero check, you must use a bank account as your Clearing account.
4. Select Continue.
   
5. In the Account Name field, enter Clearing Account, Barter Account or Wash Account. Do NOT enter an opening balance.
6. Select Save & Close.
   

To learn more about this type of account, check this our: Set up a clearing account.

If you need additional insights and assistance update me in the comment below. I'd be more than willing to lend you a hand. Have a wonderful rest of the day!

I fail to see how creating a new account provides me the opportunity to reverse the payment to the Other Customer account and apply it to my customer's account.  I would still have to reverse the payment somehow, and if a journal entry wouldn't get me there, how does having a new cash account help?

I'd like to clear up some information, carldscott.

Creating a clearing or barter account helps to move money from one account to another when you're unable to move them directly. 

Here are the following uses for a clearing account:

• You can move a Credit Memo from one job to another job under the same customer.
• Transfer an amount from one A/R account to another AR account.
• Helps to manage accrual basis bad debt.
• Allocate overhead expenses to customers or classes using a zero check.
• Record one check that pays invoices to two customers.

You can also check these articles to view more details about this account and how to transfer the credit: 

• Set up a clearing account.
• Transfer customer credit from one customer/job to another

Please get back to me if there's anything else you need. Thanks.

So, if I create that account, I can move those funds from my Undeposited Funds account and apply the payment to a different customer?  I don't see how another bank/cash account can solve this problem.  The only difference between it and my current holding account is that mine is classified as an "other current asset".  It seems I would just be moving funds to a different holding account, but it is still applied to that arbitrary customer account that Quickbooks created, and I cannot credit it to the correct customer.   Am I wrong?

If I am wrong, simply depositing the funds in my operating account should have the same result as putting into another account that is a bank account type, right?

FYI, the link you provided for setting up a clearing account clearly does not state I can move funds from one customer to another.  It only says I can re-allocate to another job with that same customer.  That makes perfect sense, but it doesn't address my problem.  My problem is that I cannot remove the credit from a customer without simultaneously reversing the credit card charge, which remains unacceptable.

Glad to have you back, @carldscott,

I can provide further clarifications on why we use clearing accounts to move funds from one account to another. To correct payments applied to incorrect customers, it is recommended to use journal entries. However, QuickBooks doesn't allow recording transactions that involves:

• Two A/R accounts
• Two A/P accounts
• One A/R account and one A/P account

Please refer to this article to learn more about this rule: You cannot use more than one AR or AP account in the same transaction.

We will need to create a journal entry from the incorrect customer to a clearing bank, and a second journal to move it to the correct A/R account. See this sample screenshots:

Doing this will leave the clearing bank a zero balance which ensures your books isn't messed up.

With regards to your other problem with the charges or fees, you can do the same process to move the funds. If these are Merchant charges from processing online payments in QuickBooks, the only way we account this for is reversing the entries in the Merchant Service Center.

You may also contact our Payments Team to get further assistance with the payments applying to incorrect invoices. Here's our contact information: Contact Payments Support.

If this requires further assistance, do let me know in the comments section. I'm here to provide further insights and assistance. Have a wonderful day!

I made the journal entries you suggested, moving the funds from my Undeposited Funds account to A/R, then back again under the appropriate customer names.  The result was that I had 2 positive and 1 negative deposits to make, which I believe would end up clearing the transaction.

However, I would still suggest that Quickbooks should have a feature that allows a user to unapply a payment.  There is an option in the Receive Payments screen to look up a customer and change the name, so that the payment would be applied to the correct customer invoice, but the functionality is disabled for any customer whose payment was made via Intuit merchant services. This is the root of the problem.  Again, once a payment has been received, the Quickbooks user needs more freedom to apply the payment where it belongs, without having to resort to 2-step journal entries.

Thanks for your feedback, carldscott.

This is not what we want you to experience. Rest assured, I'll personally share your product suggestion with our engineers regarding a feature that allows a user to unapply a payment. This way, they'll be aware of how long the process is to transfer the credit to the right customer.

In the meantime, you can follow the steps provided in the Transfer customer credit from one job to another article as a workaround.

I have articles here for your reference about managing credits:

• Transfer and apply credit from one vendor to another in QuickBooks Desktop
• Remove or unapply a credit from an invoice or bill
• Give your customer a credit or refund in QuickBooks Desktop for Windows

Visit us again if you need a hand with recording credit card payments or any QuickBooks related. I'll be here to help.

Just as I thought, not possible within the normal work flow.  I hope Intuit will update Quickbooks, so that the customer name can be changed within the Receive Payments window, AND update the Merchant Service Deposits interface, so that the Receive Payments window opens any time it does not have a positive match to an invoice (which will be every time a user swipes a card, instead of the customer paying online from an invoice).  Perhaps, the lower commission rate on chip read transactions is their way of apologizing for this inconvenience . . .

Just here looking for info on the same issue.  It's quite unfortunate that this thread is 2 years old and yet the problem still exists.  I don't understand why cc transactions have to cause so much frustration in quickbooks.  I'm curious if you actually did pass along this gentleman's issue bc apparently nothing has been addressed.  Why on earth would the payment center show the customer's name but then create a random customer "quickbooks customer" and then in the payment area gray out the functionality to change the customer? Not to mention other frustrating things about processing cc payments.  Seriously, something needs to be done about all the bugs in the cc processing system.  Processing through the invoice link and keying in cc payments on site both create issues nearly everytime!! 

Thanks for chiming in on this thread and sharing your concerns, @hryoung95. Let's work together to fix this issue with your customer's payments.

We can turn off the auto-match feature from the Record Merchant Service Deposits settings. This way, you'll be able to record deposits for the right customer. 

Here's how to do it:

1. In QuickBooks, click the Customer menu.
2. Select Record Merchant Service Deposits.
3. On the window, click the deposit settings link.
4. Under Other controls, toggle the button to off.
5. Click Save settings.
   
   
   

From there, close the Record Merchant Service Deposits window and re-open it to let QuickBooks sync and download those payments.

After bringing the transactions in and categorizing them seamlessly, we can proceed with the reconciliation process if you're ready. Check out this article for your guide: Reconcile an account in QuickBooks Desktop.

If you have any other concerns regarding your payments, let me know, and I'd be glad to assist you further. Take care and best regards.

I am also having this same issue.  The Automatic deposit feature was already disabled, but QB but it somewhere anyways.  And the area to move it is disabled.

So still the initial resolution?  Create a fake account and spend a bunch of time moving and then moving again.

So silly!