Dealing with Credit Card Payments
Receiving Credit Card Payments
Payments received by credit card are basically the same as payments received by cheque:
The procedure to deal with these receipts is:
Recovering the Merchant Fee
Charging a fee to accept credit card payments is increasingly popular. Fundamentally this is just another line item to add to the customer's invoice.
A special stock code could be created for this purpose, but it is simpler to use the same code used for "purchasing" the merchant fee charged by the provider. The corresponding analysis code could have its GL Sales Code set to the same as the GL Purchases Code or to a different account, so merchant fees recovered and merchant fees paid are kept separate in the profit and loss statement.
If the payment method is known at the point of sale, the line item can be calculated and added before committing the invoice. If the payment is being made for an invoice that is already committed, simply issue another tax invoice for the merchant fee.
Because the merchant fee forms part of the supply, the merchant fee line item inherits its GST status from the other items on the invoice. (See "Credit Card Surcharge" at http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/17956.htm.)
The merchant fee should be calculated by taking the GST-exclusive value of the items on the invoice, calculating the percentage, and adding GST to that figure. Do not calculate the percentage on the invoice total including GST, or assume the merchant fee is GST-free. (However note that taking a percentage of the GST-free total, and adding GST gives the same total as taking a percentage of the GST-inclusive total. The difference is that the merchant fee must have GST accounted for properly.)
A complication is that if the tax invoice contains a mixture of GST-free items and GST-applicable items, two line items are required to recover the merchant fee, one GST-free and one GST-applicable, as per the following example:
Therefore the total merchant fee recovered is $26.00 excluding GST, $26.80 including GST.
Important Note: Cadzow are not providers of GST or tax advice. You must consult your professional advisors for information about dealing with these issues in your environment. This article is designed to discuss the process of entering certain types of transactions into a computer system, using real-world examples.
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