There are numerous accounting challenges to be overcome in the processing of credit card transactions. We summarize the most important ones below.
How do you book credit card transactions in the accounting department?
Before you book anything, you need to know:
- Payments from the credit card acquirer to the bank account only arrive a few days later after the service has been provided.
- Sales are usually transferred as a collective payment (Collective payments = less work when posting).
- Commission per transaction is not necessarily linear (depending on card, acquirer)
- The gross turnover is relevant for accounting purposes and VAT is posted and calculated on it.
- Payments are not received on the bank account for the amount of the turnover. Payments are usually transferred by the acquirer net (less credit card commission).
- Credit card holders have the option of having payments made cancelled. Chargebacks will be deducted from further transfers or debited directly from the bank account.
Posting of credit card receivables
The table should include the following information from individual transactions:
|Date||Customer||Amount||VAT amount||VAT rate||Payment amount||Payment method|
The posting of sales in the accounting system is a collective posting. To do this, you create a posting document that summarizes the cash journal or shop journal over a period (one day, one week, one month, one quarter) and includes all the are added to the values listed.
The transaction with the customer is completed when the customer has paid for the service by credit card. You then have a receivable from the credit card acquirer in the amount of the turnover. Later, when the payment is received in your bank account, the receivable is repaid minus the commission.
You should assign a posting number to the posting document and store it together with the table. In this way, you fulfill the requirement for the "audit trail": A tax auditor can use the posting document to draw conclusions about the individual transactions on the cash strip and reconstruct the accounting. There is also a 10-year archiving requirement for journals and collective posting documents.
Credit Card Commission
The credit card transaction is usually deducted directly from the transfer of your claim - you only receive the net amount transferred to your bank account. The credit card acquirers periodically compile the turnover and commissions in a statement. Today, you can usually access this statement via the Internet in e-banking or receive it by email.
Account reconciliation and verification
The following transaction types occur on the account "Receivable from Acquirer X":
- Posting of the receivable as an offsetting entry to sales.
- Write-off of the receivable when the payment is received on the bank account.
- Credit card commission as a reduction in income.
In terms of a single transaction, the receivables account would have to be zero after the 3 transactions were completed:
|Posting of the receivable||CHF 1’000.00|
|Less bank transfer||CHF - 980.00|
|Less credit card commission||CHF - 20.00|
Since new receivables from the credit card acquirer arise daily with each transaction and these arrive in the bank account with a time delay, the account "Receivable from acquirer X" usually shows a balance.
The balance shows all the credit card acquirer's debts outstanding at the balance sheet date before the Commission enters them in the accounts.
Tip: Let the acquirer transfer your money as less as possible:
- Less booking effort
- Lower credit card commissions of your acquirer
Add up all incoming payments from the period up to the key date and calculate the due commission. The total of the commission and these incoming payments should correspond to the account balance.Sometimes there are small differences due to different value dates on your system and the acquirer's system.