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Options for managing merchant credit card payments

Depending on your credit card processing company and on the types of credit cards you accept, you may want to use different methods to track your credit card transactions. Below are some options you can choose.

Option

Use Undeposited Funds

Use a Holding account

When to use

If you know the payment and fee processing schedule used by your merchant account provider.

If you do not know the payment and fee processing schedule, or do not wish to manage your credit card sales to this level of detail.

Benefit

  • Grouping payments according to how your bank deposits batches.

  • Activity in your bank account closely matches the actual transactions, making reconciliation easier.

  • You can tell at a glance how much money you're receiving from merchant account transactions on a regular basis.

  • Allows you to keep merchant account deposits separate from your bank account until you are ready to deposit them, making reconciliation easier.

  • You can still reconcile your merchant account activity, even if you do not know or cannot easily predict your payment and fee processing schedule.

  • Allows you to manage your merchant account when you receive your statements instead of on a scheduled basis.

How do I set up each method?

Using Undeposited Funds

  1. Set the "Use Undeposited Funds as a default deposit to account" preference.

    1. Open the sales and customers preferences.

      Opening sales and customers preferences
    2. In the Receive Payments section, check the "Use Undeposited Funds as a default deposit to account" preference.

  2. Create payment items to represent the different payment methods for your sales.

    • For example, "Amex", "Discover", and "VISA/Mastercard". Use undeposited funds as the deposit to account.

  3. Enter daily sales summaries.

  4. Make Deposits

    • Record a separate "Make Deposit" for each payment method.

    • In the Payments to Deposit screen, select all the payments that are batched together by your merchant account provider for the day.

    • If you know your merchant discount fees and the fees are subtracted from the amount that your merchant service deposits to your bank account, you can deduct those fees here by adding a line to your deposit in the Make Deposits window.

      • Select the Received From column, just below the last payment.

      • Enter the charge card company (such as the QuickBooks Merchant Account Service), which has been set up as an Other Name.

      • Click the Account drop-down list and choose your merchant account fees expense account.

      • Enter the fee amount as a negative number.

      This will decrease your deposit to reflect the net deposit amount.

    • Save the deposit.

      Save the deposit.

To use a separate holding account

  1. Create an account of type "Other Current Asset" for holding credit card transactions until you are ready to transfer the funds into your bank account.

    • If you receive merchant account deposits from several different vendors you may wish to create one account for each.

  2. Create payment items to represent the different payment methods for your sales.

    • For example, "AMEX", "Discover", and "VISA/Mastercard". Use the appropriate holding account for the deposit to account.

  3. Enter daily sales summaries

  4. Transfer the amount of each deposit from your holding account into your bank account.

    • When you are ready to deposit the funds into your bank account, select Make Deposits from the Banking menu.

    • If the Payments to Deposit screen appears, click Cancel.

    • In the Make Deposits screen, enter your bank account in the Deposit To field.

    • Enter the date of the deposit in the Date field.

    • Enter a descriptive memo in the memo field (for example, "AMEX Deposit").

    • On the first line of the deposit, enter your holding account in the "From Account" column and enter the amount you wish to transfer from the holding account into your bank account.

    • If you know your merchant discount fees and the fees are subtracted from the amount that your merchant service deposits to your bank account, you can deduct those fees here by adding a line to your deposit in the Make Deposits window.

      • Select the Received From column, just below the last payment.

      • Enter the charge card company (such as the QuickBooks Merchant Service), which has been set up as an Other Name.

      • Click the Account drop-down list and choose your merchant account fees expense account.

      • Enter the fee amount as a negative number.

      This will decrease your deposit to reflect the net deposit amount.

    • Save the deposit.

      Save the deposit.
    • Continue entering all your deposits in the same way until all deposits in your bank account match with your bank statement.

      Note: You can also manually enter your merchant discount fees as a payment (check) from the holding account and transfer only the net (payments less discount fees) into your bank account.

See also

KB ID# H_RET_CCARD_OPTIONS_FOR_TRACKING
12/10/2016 8:08:59 PM
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