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# How to Record a Card Payment with a Processing Fee

> Pay a vendor bill by credit card when the card charge includes a processing fee: settle the bill at face value and book the fee to its own expense account.

Some vendors charge a processing fee when you pay a bill by credit card, so the card charge is larger than the bill. This guide settles the bill at its face value and books the fee to its own expense account. The single card charge then matches both records in Bank Match.

The examples on this page use a $4,275.00 bill paid with a card charge of $4,392.56. That charge includes a \$117.56 processing fee.

## Before you start

You need a few records and accounts in place before you record a card payment with a processing fee:

* The vendor bill is posted and approved, so it shows as an open transaction for the vendor. See [bill management](./bill-management).
* Your [chart of accounts](../general-ledger/chart-of-accounts) has a **Credit Card** type account for the card you paid with.
* Your chart of accounts has an expense account for processing fees, for example `Credit Card Processing Fees`.
* To match the charge afterward, the card is connected to a bank feed and you can match transactions in Bank Match.

## Choose a method

Vendor payments in DualEntry have no fee or bank charge field, so you record a card processing fee on a separate record. The payment amount always equals the total applied to open transactions, which means you can't enter $4,392.56 on a payment that applies $4,275.00. Method 1 is the simpler one and is recommended for most teams. Method 2 suits teams that record card fees through journal entries.

Both methods keep the fee out of accounts payable and settle the bill at the amount the vendor invoiced. The fee lands in its own expense account, so you can report card fees separately from spend with the vendor.

<Warning>
  Don't add the \$117.56 fee as a line on the vendor bill. That inflates the payable to the vendor and misstates spend with them. Also don't book the fee on a direct expense line coded to accounts payable. A direct expense can't be applied to a bill, so the bill stays open.
</Warning>

## Method 1: Vendor payment plus direct expense

Method 1 settles the bill with a vendor payment for the bill amount and books the fee as a separate direct expense on the same card. A direct expense is a payment recorded straight from a bank or credit card account, without a bill.

### 1. Pay the bill from the credit card

1. Go to **Money Out → Vendor Payments** and create a new payment. You can also open the bill and choose **Record payment**.
2. Select the **Company** and **Vendor**.
3. In **Bank or credit card account**, select the credit card.
4. Under **Open Transactions**, enter `4,275.00` in the bill's **Applied Amount**.
5. Set the date to the date of the card charge and save the payment.

The payment debits accounts payable and credits the credit card account for $4,275.00. The bill's amount due drops to $0.00.

### 2. Record the fee as a direct expense

1. Go to **Money Out → Direct Expenses** and create a new direct expense.
2. Select the **Company** and a **Vendor**. The vendor field is required. Use the vendor that charged the fee, or your card processor if that is how you track fees.
3. In **Bank or credit card account**, select the same credit card you used in step 1.
4. On the **Expenses** tab, add one line for \$117.56 to your processing fee expense account.
5. Use the same date as the vendor payment and save.

The direct expense debits the fee expense account and credits the credit card account for \$117.56.

### 3. Match the card charge to both records

Bank Match pairs transactions from your bank and card feeds with the DualEntry records they settle. One card transaction can match several records.

1. Go to **Bank Match** and open the **To Match** tab.
2. Select the \$4,392.56 card transaction.
3. Select both the vendor payment ($4,275.00) and the direct expense ($117.56).
4. Confirm that **Difference** in the summary bar reads \$0.00.
5. Choose **Match**.

The match moves to the **Matched** tab as one group. For details on multi-leg matching, see [how to match transactions](../close-management/bank-match/how-to-match-transactions).

## Method 2: Journal entry applied to the bill

Method 2 records the whole card charge in one journal entry. A vendor payment then applies that entry against the bill to close it.

### 1. Create the journal entry

Go to **Transactions → Journal Entries** and create an entry dated on the card charge date with the lines in the table below. On the accounts payable line, set the **Customer/Vendor** column to the bill's vendor. Without the vendor, the line can't be applied to the bill.

Journal entry lines for the example charge:

| Account                     | Customer/Vendor   | Debit    | Credit   |
| --------------------------- | ----------------- | -------- | -------- |
| Accounts Payable            | The bill's vendor | 4,275.00 |          |
| Credit Card Processing Fees |                   | 117.56   |          |
| Credit card account         |                   |          | 4,392.56 |

Post the entry. Only posted journal entries can be applied to a bill.

### 2. Apply the journal entry to the bill

1. Go to **Money Out → Vendor Payments** and create a new payment.
2. Select the same **Company** and **Vendor**. In **Bank or credit card account**, select the credit card.
3. Under **Open Transactions**, apply `4,275.00` to the bill. Then apply the journal entry line, which shows as `-4,275.00`.
4. Confirm that the payment's **Applied Amount** is \$0.00.
5. Set a date on or after the journal entry date.
6. Save the payment.

The bill's amount due drops to \$0.00. The fee expense and the card liability come from the journal entry.

### 3. Match the card charge

1. In **Bank Match**, on the **To Match** tab, match the \$4,392.56 card transaction to the journal entry's credit card line.
2. The $0.00 vendor payment leaves a +$4,275.00 and a -\$4,275.00 entry on the card account. Select both, with no bank transaction selected, and choose **Clear offsetting transactions**.

## Verify the result

After you complete either method, check these balances to confirm the card payment and fee posted correctly:

* **Bill**: amount due is \$0.00 and the bill shows as paid.
* **Processing fee expense account**: shows a \$117.56 debit.
* **Credit card account**: shows a net \$4,392.56 credit for the charge.
* **Bank Match**: the \$4,392.56 card transaction is on the **Matched** tab.

## Troubleshooting

The table below lists common problems when you record a card payment with a processing fee.

| Symptom                                                                   | Cause                                                                                                                              | Fix                                                                                                    |
| ------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ |
| The journal entry line doesn't appear under **Open Transactions**         | The entry isn't posted. Or the accounts payable line has no vendor, or its vendor, company, or currency doesn't match the payment. | Post the entry and set **Customer/Vendor** on the accounts payable line to the bill's vendor.          |
| Saving the payment fails with "does not impact Accounts Payable"          | The applied journal entry line isn't on an accounts payable account.                                                               | Apply the line that debits accounts payable, not the fee or card line.                                 |
| Saving the payment fails on the date                                      | The payment date is earlier than the journal entry date.                                                                           | Date the payment on or after the journal entry.                                                        |
| **Match** is disabled with "Selected transactions' amounts don't balance" | A record is missing, has the wrong amount, or is on a different card account.                                                      | Confirm both records use the same card account and total \$4,392.56.                                   |
| The direct expense fails with "must be of type bank or credit card"       | The paying account isn't a bank or credit card account.                                                                            | Select the credit card in **Bank or credit card account** and put the fee account on the expense line. |

## Related

* [Vendor payments](./vendor-payments): applying payments, credits, and journal entries to bills
* [Journal entries](../general-ledger/journal-entries): creating and posting manual entries
* [How to match transactions](../close-management/bank-match/how-to-match-transactions): one-to-many and multi-leg matches