How are bank fees and card-processing fees on receipts accounted for?

Intermediate

Answer

When customers pay by card or bank transfer, processors/banks deduct fees, so cash received is less than the invoice. Apply the full invoice to AR and record the fee as an expense, so the receivable clears fully and the fee is recognized. Reconciliations must account for the net-of-fee deposit.

Invoice 1,000, card fee 25, net deposit 975:
  Dr Bank 975  Dr Bank/Card Fees 25  Cr AR 1,000

Real-world example A $1,000 card payment nets $975 after fees; AR is cleared in full and the $25 fee is expensed.

Common follow-ups: Why apply the gross invoice, not the net? | Where does the fee post?

Reconciliations Collections & Bad Debts Cash Application

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