Book keeping - accounting question


Example You are a Service business, your customer pays you $100 for "Service X" via credit card.
You charge the customer an additional 2% of total sale for paying via Creditcard.

Hence the total the customer will pay you is $102.

Your bank charges you a merchant service fee, 1.5% of total sale and your credit card gateway charges you $0.25 per transaction.

So for a sale of $102, you pay $1.53 + $0.25 = $1.78

You make $100 for Service X, you also make $2.00 - $1.78=$0.22 on the credit card fee!

Now how do you record this?


Service X = +$100

Other Revenue = +$2.00

Bank Service Fee = $1.78

Credit Card Gateway Fee = $0.25



Service X = +$100

Other Revenue = +$2.00

then record the bank fee, and gateway fee separately, not actually calculating the actual amount charged from the transaction.

Business Accounting

asked Sep 17 '10 at 23:51
167 points
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  • Do your customers go for this? If my vendors nickel and dimed me for merchant fees, I'd save them the fee by using a different vendor. – Duffbeer703 13 years ago

2 Answers


A word of warning- you should carefully check the wording of your merchant credit card agreement. Most merchant accounts strcitly prohibit you from charging an extra fee to accept a credit card.

answered Sep 18 '10 at 01:26
Gary E
12,510 points
  • Actually, not quite. They prohibit you from charging an extra fee to use THEIR service. However, you are usually allowed to charge an extra fee to ALL credit purchases. This is to prevent you from using different merchant services depending on a variety of factors. – Elie 13 years ago
  • It was just rounded up so that it's easier to just tell the customer we charge 2% on top, instead of saying we charge 1.5% plus $0.25. – 001 13 years ago
  • I have both my American Express and Visa/Master Card agreements right here and both prohibit me from charging a different price on credit card orders than I do on cash or check orders. They are very explicit. – Gary E 13 years ago
  • Interesting. Every vendor I've looked at/used allowed me to charge a fee, as long as it was across the board (that is, it had to be the same for all credit/debit transactions). – Elie 13 years ago


I usually use the second method, as I don't like keeping track of every single fee, especially when processing more than just a couple. At the end of each month, I just total the fees I had to pay to various businesses (bank, payment gateway) and enter it as one line.

answered Sep 18 '10 at 00:28
4,692 points
  • Method #1 is more accurate, but very painful to do it this way. Eitherway both methods would provide the same result :) – 001 13 years ago

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