Stripe: Processing Fees / Merchant Card Fees

Overview

When using the Stripe Integration in CustomBooks™, customers can make payments on Sales Orders/Invoices using Stripe. Stripe processes the payment and deducts its applicable processing fee before depositing the remaining funds into your bank account.

CustomBooks™ does not currently have an option to automatically pass Stripe processing fees to customers or automatically add those fees to their Sales Invoices. Instead, the processing fee is treated as a merchant expense and is automatically recorded in CustomBooks™ as part of the Stripe deposit.

How Stripe Processing Fees Are Accounted For

When a customer payment is processed through Stripe, the payment and associated processing fee are handled as part of the Stripe deposit process.

The process is as follows:

The customer pays the Sales Order/Invoice through Stripe.
Stripe processes the payment and deducts the applicable processing fee.
Stripe deposits the remaining funds into your bank account.
Stripe notifies CustomBooks™ of the deposit.
CustomBooks™ automatically creates a Bank Deposit document containing the applicable receipts.
The merchant card processing fee is recorded on the G/L Tab of the Bank Deposit.

This allows the accounting records to reflect both the customer's payment and the processing fee deducted by Stripe.

Example

Suppose a customer pays a $1,000 invoice through Stripe and Stripe deducts a $30 processing fee.

The transaction is accounted for as follows:

Customer payment: $1,000
Stripe processing fee: $30
Amount deposited to your bank: $970

The customer's invoice is considered paid for the full $1,000. The $30 processing fee is recorded separately on the G/L Tab of the Bank Deposit as a merchant card fee.

Passing Processing Fees to Customers

CustomBooks™ does not currently support automatically adding or passing Stripe processing fees to customers when they pay an invoice.

If you would like to recover the Stripe processing fees from your customers, the fees must be added manually to the invoice before sending it to the customer. This allows the additional amount to be included in the total amount due.

However, adding an additional amount to the customer's invoice to recover the merchant processing fee will also increase the amount subject to Stripe's transaction fee.

This happens because Stripe applies its percentage fee to the total transaction amount, which now includes the fee you just added. Because you are charging the customer more, Stripe charges you more, leaving you short of your original invoice amount.

For example, if a customer is being invoiced $1,000 and you add an additional amount to recover the Stripe processing fee, Stripe's transaction fee will be calculated based on the applicable transaction amount, including the additional amount charged to the customer.

Note: If your business charges customers a payment processing fee, ensure that the practice complies with applicable laws, regulations, and card-network requirements.

Reviewing the Processing Fee

You can review the merchant card fee from the automatically created Bank Deposit:

Open the applicable Bank Deposit.
Select the G/L Tab.
Review the merchant card fee recorded with the deposit.

The Bank Deposit provides the accounting detail for the Stripe payment, including the processing fee deducted before the funds were deposited.

Summary

The Stripe Integration does not currently provide an option to automatically pass Stripe processing fees to customers or add the fees to their Sales Invoices.

If you want to recover the processing fees from your customers, you must manually add the applicable fee to the invoice before sending it. However, Stripe applies its standard transaction fees according to your Stripe account agreement, and adding an additional amount to the invoice to recover the merchant fee will also increase the amount subject to Stripe's transaction fee.

When the customer pays through Stripe, Stripe deducts the applicable processing fee from the payment before depositing the funds. CustomBooks™ automatically records the merchant card fee on the G/L Tab of the corresponding Bank Deposit, allowing the customer's payment and the related processing expense to be properly reflected in the accounting records.