What CPAs Need to Know About Credit Card Surcharges

Credit cards make acceptant client payments much more convenient, but credit card processing fees — sometimes known as checkout fees — can be extremely expensive. 

When you accept a credit card payment from one of your clients, how much are you charged for the credit card transaction? For some CPA practices, credit card transaction fees can cost thousands of dollars a year. As such, there has been a desirable trend to pass these fees onto their client’s when possible 

If your CPA practice accepts credit card payments, here’s what you need to know about credit card surcharges.

Will Accepting Credit Cards Help Me Attract Clients?

In today’s world, your clients expect to be able to pay their invoices online. If your CPA practice is able to send invoices online and accept credit card payments through your website, you’ll be able to attract more clients.

Additionally, when clients have the opportunity to make credit card payments online, they tend to pay faster, so you’ll have access to your money much more quickly. Through our partnership with practice management platforms, our merchants tell us that they have experienced a dramatic reduction in time from invoicing to payment receipt. Initial statistics show that the majority of aged invoices go from 47 days to 48 hours by offering payment convenience with credit cards and electronic check.  

Why Do Credit Cards Have Processing Fees?

Credit card processing fees take a cut of your profits, but why do credit cards have processing fees in the first place?

Credit card processing fees usually include three different types of charges: interchange fees, assessment fees, and the payment processor’s markup. Chase, Citi, Bank of America, or other credit card issuers charge merchants a small commission fee for the ability to accept a credit card. 

The actual processing for each credit card varies based on risk. For example, debit cards with PINs are lower risk than credit cards, so the processing fee is lower. A key consideration in this is the carrying costs that the firm experiences by not getting paid sooner. As shown above, the reduction in time to payment can be drastically reduced and in turn will empower your accounting firm with a much better cashflow cycle.  

What is a Credit Card Surcharge, and is it Legal?

A credit card surcharge is defined as adding up to 4 percent on credit card transactions, allowing merchants to recoup payment processing costs. 

After a class-action lawsuit against Visa and MasterCard in 2013, credit card surcharges became acceptable, but different states have different laws regarding credit card surcharges. In fact, surcharging has been challenged in certain states, including California and New York.  Click here to set up a time with a CPA Pay payments expert who can walk you through the compliance steps and requirements. 

What are the Benefits of Accepting Credit Card Payments?

Though the credit card processing fees can be significant, when you accept all major credit cards, you’re meeting your clients where they are. Giving your clients the option to pay online with a credit card makes it easy for them to make timely payments and have access to your money quickly.

When you accept credit card payments, it also gives you the ability to schedule payments in advance and even set up recurring payments, allowing you to better forecast your cashflow.

Want to learn more about credit card surcharges? Contact us today. Our customer service representatives will walk you through how you can start processing credit card payments and avoid the processing fees.

See How Much You Could Save​

Contact us today to see how easy and convenient it can be to accept payments online and find out how much you could be saving on processing fees every year.