What do I do with credit card transaction fees

OldGoat

Hi all.
Excuse the newbie question but I am by no means an accountant

I am in South Africa and Wave does not offer credit card payments option so I have to use a third party to process them.
My process is (when someone pays with credit card), generate an invoice. Client pays with credit card and I "receive payment" on my system for the full amount. I then send invoice marked as paid to client.
However.. a few days later my credit card facilitator then pays the amount (minus their fees) into my bank.

Now I have two "payments" in my transactions for same client. How would I deal with this?

Alexia

Hi, @OldGoat.

We're at work on a streamlined way to handle merchant account fees from third-party payments processors. For the time being, here's the workaround we recommend:

• Create a special holding account to record the full payment.  Head over to the "Chart of Accounts" in the Accounting tab. Click "Add an Account" and choose "Money in Transit" as the account type under the "Asset" header.

• When you get paid, add an income transaction to this account for the full amount of the invoice before fees, and categorize this transaction to "Payment for an invoice in Wave".

• Add an expense transaction to the holding account for the amount of the merchant fees, categorized to "Merchant Account Fees."

• When the payment is pulled in from a bank connection (this should be the full payment amount less those fees) categorize this transaction as a "Transfer from.." and select the holding account.  

We're building out a way to cut down the steps above, so this workflow is only temporary! For now, this will allow you to account for merchant fees as a separate expense without throwing off your ability to perform Reconciliation.

OldGoat

Thank you. Much appriciated