Understanding Processing Fees & Convenience Fees

Learn how payment processing fees work, and how to configure convenience fees to help recover your costs.

Overview

When clients pay invoices online through credit cards or ACH bank transfers, processing fees are charged by QuickBooks Payments. You have two options:

Absorb the fees - You pay the processing costs
Forward the fees - Clients pay a convenience fee to cover processing costs (Pro feature)

Availability:

Credit Card Payments: All plans
ACH Payments: Pro & Enterprise
Fee Forwarding (Convenience Fees): Pro & Enterprise

QuickBooks Payment Processing Fees

Who Sets These Fees?

Important: Processing fees are set by Intuit/QuickBooks Payments, not ClientSynq. ClientSynq provides the portal interface - QuickBooks handles all payment processing.

Standard Processing Fees

Credit Card Payments:

Rate: 2.9% + $0.25 per transaction
Example: $1,000 invoice = $29.25 in fees
Processing Time: Instant authorization, 1-2 business days to your account

ACH Bank Transfer Payments (Pro & Enterprise):

Rate: 1.0% (capped at $10 maximum)
Example: $1,000 invoice = $10.00 in fees
Processing Time: 5-7 business days
Much cheaper than credit cards!

Volume Discounts

High-volume businesses may qualify for lower rates directly from QuickBooks Payments. Contact Intuit to discuss custom pricing for your business.

What is Fee Forwarding (Convenience Fees)?

Fee Forwarding (also called "Convenience Fees") allows you to add a fee to client invoices when they pay by credit card or ACH, helping you recover the processing costs.

How It Works

Without Fee Forwarding:

Client Invoice: $1,000.00
Processing Fee (2.9%): -$29.25 (you pay)
You Receive: $970.75

With Fee Forwarding:

Client Invoice: $1,000.00
Convenience Fee (3.0%): +$30.00 (client pays)
Total Client Pays: $1,030.00
Processing Fee: -$29.25 (QuickBooks)
You Receive: $1,000.75 (roughly breaks even)

Benefits

✅ Recover Processing Costs - Don't absorb $29+ per transaction
✅ Encourage ACH Payments - Lower fee encourages bank transfers
✅ Transparent - Clients see exactly what they're paying for
✅ Automatic - Calculated and added automatically
✅ QuickBooks Integration - Fees recorded as line items

Considerations

⚠️ Client Perception - Some clients may prefer to pay by check to avoid the fee
⚠️ Legal Restrictions - Some states prohibit or restrict convenience fees
⚠️ Competitive Disadvantage - Competitors may not charge fees
✅ Industry Standard - Many businesses pass on processing fees
✅ Alternative Payment - You still accept checks/cash without fees

Configuring Fee Forwarding

Prerequisites

✅ ClientSynq Pro or Enterprise plan
✅ QuickBooks Online connected
✅ QuickBooks Payments enabled
✅ Processing fee item created in QuickBooks

Step 1: Create a Fee Item in QuickBooks

Before enabling fee forwarding in ClientSynq, create an item in QuickBooks:

Log in to QuickBooks Online
Go to Settings (gear icon) → Products and Services
Click New → Select any type:
- Service (most common)
- Non-Inventory
- Inventory (if you track it)
- Bundle
Name it: "Processing Fee" or "Convenience Fee"
(Optional) Set default price/rate - ClientSynq will override this
Select income account (e.g., "Service Income" or create "Processing Fee Income")
Check "I sell this product/service to my customers"
Click Save and Close

Tip: Consider creating separate items for Credit Card and ACH fees if you want detailed reporting.

Step 2: Enable Fee Forwarding in ClientSynq

Log in to ClientSynq
Go to Settings → Payment Settings
Scroll to "Fee Forwarding" section
Toggle "Enable Fee Forwarding" to ON
Configure fee rates (see below)
Select your QuickBooks fee item from the dropdown
Click "Save Settings"

Step 3: Set Fee Rates

When fee forwarding is enabled, you'll see two fields:

Credit Card Fee Rate (%)

Enter as percentage (e.g., 3.0 for 3.0%)
Common settings: 2.9% - 3.5%
Recommendation: 3.0% to cover 2.9% + $0.25 transaction fee

ACH Fee Rate (%)

Enter as percentage (e.g., 1.0 for 1.0%)
Common settings: 1.0% - 1.5%
Recommendation: 1.0% to cover the 1% processing fee

Step 4: Select QuickBooks Fee Item

Click the "QuickBooks Integration" dropdown
Select the fee item you created (e.g., "Processing Fee")
If you don't see your item, click "Sync QBO Items"
Save your settings

Note: Fee invoices will use this item for line-item detail in QuickBooks.

How Clients See Convenience Fees

Invoice View

When viewing an unpaid invoice, clients see:

Invoice #1234                  $1,000.00

Payment Options:
[ ] Credit Card (3.0% convenience fee)
[ ] ACH Bank Transfer (1.0% convenience fee)

Payment Screen

Before completing payment:

Invoice Amount:        $1,000.00
Convenience Fee (3.0%):   $30.00
────────────────────────────────
Total to Pay:          $1,030.00

Receipt/Confirmation

After payment:

✓ Payment Successful

Invoice #1234:         $1,000.00
Convenience Fee:          $30.00
────────────────────────────────
Total Paid:            $1,030.00

Payment Method: Visa ending in 1234
Confirmation: PAY-1234567890

Legal Considerations & Best Practices

State & Local Laws

IMPORTANT: Convenience fee regulations vary by state and locality.

States with Restrictions:

Some states prohibit convenience fees on credit cards
Some allow fees but have maximum percentage limits
Some require specific disclosures or terminology

What You Should Do:

Consult with your accountant or legal advisor
Research your state's convenience fee laws
Check industry-specific regulations
Review your merchant agreement with QuickBooks Payments

Resources:

National Conference of State Legislatures
Your state's Attorney General website
QuickBooks Payments terms of service

Terminology Matters

"Convenience Fee" vs "Surcharge"

These terms have different legal meanings:

Convenience Fee:

Fee for the convenience of online/instant payment
Generally more permissible
Must offer alternative payment methods without fee
Use this term in ClientSynq

Surcharge:

Additional charge specifically for using credit cards
More heavily regulated
May be prohibited in some states
Avoid this terminology

Required Disclosures

Best Practices:

Terms of Service - Mention convenience fees in your terms
Invoices - Some states require fees shown on invoices
Before Payment - Always disclose fee before payment is made (ClientSynq does this automatically)
Alternative Methods - Offer check/cash payment without fees

Example Terms Language:

"A convenience fee of 3.0% for credit card payments and 
1.0% for ACH payments may be added to recover processing 
costs charged by our payment processor. You may avoid 
this fee by paying via check or cash."

Maximum Percentage

Recommendations:

Don't exceed actual processing costs
Typical range: 2.5% - 4.0% for credit cards
Typical range: 1.0% - 2.0% for ACH
Higher percentages may seem unreasonable to clients

Fee Calculation Examples

Example 1: Credit Card Payment

Invoice Amount:        $1,000.00
Your Fee Rate:         3.0%
Convenience Fee:       $30.00
Client Pays:           $1,030.00

QuickBooks Charges You: $29.90 (2.9% + $0.25)
Your Net:              $1,000.10

Example 2: ACH Payment

Invoice Amount:        $1,000.00
Your Fee Rate:         1.0%
Convenience Fee:       $10.00
Client Pays:           $1,010.00

QuickBooks Charges You: $10.00 (1.0%)
Your Net:              $1,000.00

Example 3: Large ACH Payment

Invoice Amount:        $5,000.00
Your Fee Rate:         1.0%
Convenience Fee:       $50.00
Client Pays:           $5,050.00

QuickBooks Charges You: $10.00 (1.0% capped at $10)
Your Net:              $5,040.00
(You actually profit $40 on this one!)

Accounting & QuickBooks Integration

How Fees Are Recorded

When fee forwarding is enabled:

Invoice Created - Original invoice amount in QuickBooks
Client Pays - Payment includes convenience fee
Fee Line Item - Separate line using your selected fee item
Payment Applied - Both invoice and fee marked as paid

In QuickBooks

Sales Transaction:

Invoice #1234
  Line Item: Services           $1,000.00
  
Payment Received:              $1,030.00

Fee Invoice #FEE-1234
  Line Item: Processing Fee        $30.00

Income Reporting

Convenience fees appear as:

Separate line items
Under the income account you selected for your fee item
Easily filterable for reporting

Tax Implications:

Convenience fees are typically taxable income
Consult your accountant about proper classification
May need to charge sales tax on convenience fees (state-dependent)

Client Communication

When to Inform Clients

Best Practice: Tell clients about convenience fees before they try to pay.

When to Communicate:

Initial Terms - Include in service agreement
First Invoice - Mention in email or on invoice
Portal Invitation - Briefly mention payment options
Invoice - Fee shown automatically when viewing

Sample Communication

Email to Clients:

Subject: New Online Payment Options Available

Hi [Client Name],

We're excited to offer you convenient online payment 
options! You can now pay invoices instantly using:

• Credit/Debit Card (3.0% convenience fee)
• ACH Bank Transfer (1.0% convenience fee)

Or continue paying by check or cash with no additional fees.

The convenience fee helps us recover the processing costs 
charged by our payment processor for instant payments.

Questions? Just reply to this email!

- [Your Name]

Handling Client Questions

"Why is there a fee?"

"The convenience fee helps us recover the processing costs charged by QuickBooks Payments for instant, online payments. You can always pay by check or cash without any fees."

"Can I avoid the fee?"

"Absolutely! You can pay by check, cash, or bank transfer (mailed) with no convenience fee. The fee only applies to instant online payments."

"Isn't 3% high?"

"The fee covers our actual processing costs from QuickBooks Payments, which charges us 2.9% + $0.25 per transaction. We're passing along the actual cost, not making extra profit."

Strategies to Minimize Client Pushback

1. Promote ACH Payments

ACH fees are much lower (1% vs 3%):

Highlight ACH as the "low-cost option"
Educate clients on ACH savings
Set ACH as the default payment method

2. Offer Early Payment Discounts

Offset the convenience fee:

"Pay within 10 days: 2% discount
(More than covers the 3% convenience fee!)"

3. Bundle Into Pricing

For recurring clients:

Increase base rates slightly
Remove convenience fees
Simplify billing

4. Make It Optional

Tiered pricing:

Option A: $1,000 - Pay online with convenience fee
Option B: $970 - Pay by check (3% discount)

5. Focus on Convenience

Emphasize benefits:

Instant payment
24/7 access
Automatic receipts
Secure processing
No stamps or checks needed

Troubleshooting

"Fee Forwarding Toggle is Disabled"

Problem: Can't enable fee forwarding.

Solution:

Verify you have Pro or Enterprise plan
Check feature access in Settings → Billing
Upgrade if on Basic plan

"QuickBooks Item Not Showing"

Problem: Created fee item in QBO but don't see it in ClientSynq.

Solution:

Make sure item is marked "I sell this to customers"
Ensure item is Active (not inactive)
Click "Sync QBO Items" in Payment Settings
Wait 30 seconds and refresh the page

"Fees Calculating Incorrectly"

Problem: Fee amount seems wrong.

Check:

Fee rates are entered as percentages (3.0, not 0.03)
Decimal places correct
Right fee applied to right payment method

"Clients Not Seeing Fee Disclosure"

Problem: Clients say they didn't know about the fee.

Solution:

Fee is automatically shown before payment
Client must confirm before completing payment
Check that they're viewing the correct invoice
Ensure payment settings are saved

Best Practices Summary

DO:

✅ Research your state's convenience fee laws
✅ Set fees close to actual processing costs
✅ Disclose fees clearly and early
✅ Offer alternative payment methods without fees
✅ Use the term "convenience fee" (not "surcharge")
✅ Promote ACH for lower fees
✅ Include fee policy in your terms

DON'T:

❌ Charge excessive fees (over 4%)
❌ Hide fees until last minute
❌ Call it a "surcharge" or "credit card fee"
❌ Make online payment the only option
❌ Forget to consult legal/accounting advisors

Need Help?

Setting up fee forwarding: support@clientsynq.com
Legal questions about fees: Consult your attorney
QuickBooks Payments questions: Intuit Support

Last updated: October 27, 2024
Applies to: Pro and Enterprise plans

Understanding Processing Fees & Convenience Fees

Understanding Processing Fees & Convenience Fees

Overview

QuickBooks Payment Processing Fees

Who Sets These Fees?

Standard Processing Fees

Volume Discounts

What is Fee Forwarding (Convenience Fees)?

How It Works

Benefits

Considerations

Configuring Fee Forwarding

Prerequisites

Step 1: Create a Fee Item in QuickBooks

Step 2: Enable Fee Forwarding in ClientSynq

Step 3: Set Fee Rates

Step 4: Select QuickBooks Fee Item

How Clients See Convenience Fees

Invoice View

Payment Screen

Receipt/Confirmation

Legal Considerations & Best Practices

State & Local Laws

Terminology Matters

Required Disclosures

Maximum Percentage

Fee Calculation Examples

Example 1: Credit Card Payment

Example 2: ACH Payment

Example 3: Large ACH Payment

Accounting & QuickBooks Integration

How Fees Are Recorded

In QuickBooks

Income Reporting

Client Communication

When to Inform Clients

Sample Communication

Handling Client Questions

Strategies to Minimize Client Pushback

1. Promote ACH Payments

2. Offer Early Payment Discounts

3. Bundle Into Pricing

4. Make It Optional

5. Focus on Convenience

Troubleshooting

"Fee Forwarding Toggle is Disabled"

"QuickBooks Item Not Showing"

"Fees Calculating Incorrectly"

"Clients Not Seeing Fee Disclosure"

Best Practices Summary

DO:

DON'T:

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