How To Handle Merchant Fees In QuickBooks Pro
If you accept payments from your customers, whether you’re using PayPal, Stripe, Square, or some other payment processor, you most likely are paying merchant fees. But how do you properly enter merchant fees into QuickBooks?
In this post, we’ll cover two different ways to enter merchant fees. We’ll explain what to do if your merchant account provider charges you per transaction or via a lump sum at the end of each month. This way, you can know how much money your business actually has, and you can be certain all of your information is correct for year-end taxes.
If you don’t have a payment processor yet but want to accept online payments from your customers, visit our comprehensive merchant account reviews to find the best payment processor for your business.
Table of Contents
How To Enter Merchant Fees Per Transaction
If you use PayPal, Square, or a similar payment processor, you are charged a certain percentage for each transaction you process. For example, PayPal charges 2.9% +$0.30/per transaction. Believe it or not, entering this information into QuickBooks Pro is actually fairly simple.
Before you begin, make sure you have created a designated expense account called “Merchant Fees.” If you’re not sure how to do this, follow the steps in our How To Enter Credit Card Charges In QuickBooks Pro post (only select “expense” rather than “credit card”).
Then, go to Customers>Receive Payments or find the “Receive Payments” icon on the home screen.
Step 1: Select Your Customer
Use the drop-down menu to select the customer whose payment you are recording. QuickBooks will pull up all outstanding invoices attached to that customer and autofill information accordingly.
Step 2: Enter Payment Amount
Type in the exact amount the customer is paying.
Step 3: Select Payment Option
Choose how the customer is paying.
Clicking “More” will take you to payment methods, such as PayPal and Stripe (Note: If this is your first time recording merchant fees, click the “Add New” button to add whatever processor you use.)
Step 4: Edit The Date
Make sure the correct date is chosen using the drop-down calendar.
Step 5: Enter A Reference Number (Optional)
If you have a reference number, you can enter it now.
Step 6: Add Any Additional Info
Now you can add any extra info, such as the original amount, amount due, and a memo.
Step 7: Go To Record Deposit
Now return to your home screen. You should see a red notification on the “Record Deposit” icon. Click on it.
Step 8: Select The Transaction
Click next to the payment we just recorded. Once you see the checkmark, click okay.
Step 9: Select Your Merchant Fees Account
On the line directly underneath the payment that you recorded, select your merchant account.
Step 10: Enter Merchant Fee
Enter your merchant fee using a negative number. QuickBooks will automatically deduct the merchant fee from the total payment.
Step 11: Record Your Deposit
Double-check that your screen looks correct and that the total on the bottom right-hand corner appears correct. Then click “Save & Close.”
Repeat this process as many times until all of the merchant fees for each payment are properly recorded.
How To Enter Merchant Fees As A Lump Sum
It’s rare, but some processors, such as Fattmerchant, charge a monthly merchant fee. If this is the case for your processor, go to the “Check Register” icon on the home page or go to Banking>Use Register and then select the account you use to pay merchant fees.
Step 1: Edit The Date
Make sure the correct date is chosen using the drop-down calendar.
Step 2: Choose Your Vendor
Where it says “Payee,” use the drop-down menu to select the vendor you are paying.
Step 3: Select Your Merchant Fees Account
Where it says “Account,” use the drop-down menu to select your merchant fees account.
Step 4: Add A Memo (Optional)
You can add a memo to describe the payment if you’d like.
Step 5: Enter Merchant Fee
Where it says “Payment,” enter your merchant fee payment.
Step 6: Save
Click “Record” to save your entry.
Now your merchant fee is recorded correctly. You can rest easy knowing that your QuickBooks information is correct.
For troubleshooting issues, check out the QuickBooks Community or call QuickBooks directly. Don’t forget to check out the rest of our QuickBooks Desktop Pro 101 Series to learn how to add a bank account, reconcile a bank account, enter credit card charges, enter a bill, enter credit card payments, and more.
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Please, can you tell me how to enter a payment in QBD to apply to the invoice that has not been added the Merchant fees to the invoice balance? For example:
The invoice amount created and sent out to the client is=$100
And then the client wants to pay the invoice($100) and ($3), merchant fees since he or she pays with a credit card. How I apply the amount of $103 to invoice that amount $100 without leaving $-3 in my account. Thank
This comment refers to an earlier version of this post and may be outdated.
Hi Raniah,
You’ve stumped us on this one! Your best bet would be to contact QuickBooks with your question and see if they can direct you. So sorry we couldn’t help you, but hopefully, QB will be of assistance to you! Best wishes!
This comment refers to an earlier version of this post and may be outdated.
From my reading of the poster’s question it appears to me that they want to know what the Total Transaction (TA) amount is such that the Service Fee (SF) of $100 is not diminished by the Merchant Fee (MF) which for this example is 3% of the TA. Many of us simply absorb the MF as a cost of doing business. However, if I understand the question correctly, the procedure to recover the MF is to divide the SF by .97 giving a TA of about $103.09. The SF won’t be exactly $100 but close. Now, the TA is posted as $103.09, the MF is posted as -3.09 and the SF of $100 is preserved.
This comment refers to an earlier version of this post and may be outdated.
Hi There,
After applying these fees in the deposit window. The fees shows up in the merchant account as we have yet to pay this balance. Truth is these fees are deducted directly from our bank account so how should I show that there is no balance to be paid?
This comment refers to an earlier version of this post and may be outdated.
Hi Pooja,
Great question! I recommend checking out Candus Kampfer’s videos on merchant fees as they will walk you through exactly how merchant fees work in QuickBooks in more detail.
Best wishes,
-Chelsea Krause
This comment refers to an earlier version of this post and may be outdated.
Will this transaction show a negative expense on the P&L?
This comment refers to an earlier version of this post and may be outdated.
Hi Rory,
Your Merchant Fees won’t show up as negative; they’ll just be listed under “expenses” on the Profit & Loss Statement. So your P&L will look something like this:
Hope that helps!
Best wishes,
-Chelsea Krause
This comment refers to an earlier version of this post and may be outdated.