Accounting for Transaction Processing Fees

When a company accepts payment by credit card, the company incurs a transaction processing fee from a payment processing network (Visa, MasterCard, etc.).  Thus, if a customer makes a $100 purchase, the company won't receive the full $100 due to the transaction processing fee.  

Transaction processing fees (aka credit card fees or payment processing fees) are an operating expense and not a reduction of sales revenue.  Thus, if a company accepts a credit card as payment for a $100 purchase, and the company is charged a transaction processing fee of 3%, the company would increase its cash account by $97, record a $3 expense, and record $100 of sales revenue.

Some companies apply a surcharge to transactions in which the customer pays with a credit card (to recoup the cost of the payment processing fees).  If a company does assess a surcharge, this would increase the amount of cash received by the company (since it is collecting the surcharge) and increase the company's revenue.
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• #education
• #credit_card_fees
• #interchange_fees
• #merchant_services_credit_card_processing
• #accounting_for_transaction_processing_fees
• #payment_processing_fees
• #how_to_account_for_credit_card_processing_fees
• #how_to_account_for_credit_card_sales