Charging Fees to Clients
If you want to accept credit cards but don't want to absorb the service fee levied through your merchant account, you can pass this fee on to your customers (but be ready for their complaints). This is setup at the gateway level and can be deactivated at the contact level if necessary. We can't tell what the fee will be for you, but by using a simple formula you can choose how much to pass on to your customers.
To charge a processing fee to your customers:
- Log into uCollect as an administrator
- Go to Edit, Organisation Settings, Payments Gateway section, and click the edit icon next to your selected gateway.
- Find the option titled "On-Charge Fees to Customers?" and check the box. A number of new options will appear.
- Make your settings and click Update
Here are what each of the fields will do:
- Per Transaction $ Amount: this will add a fixed amount charged to each collection (e.g., 1.00 will add $1)
- Per Transaction Commission %: This will add a percentage of the total collection amount (e.g., if the total collection is $100 and this is set to 3% then a $3 charge will be added). This can be used in addition to the Per Transaction $ Amount.
- Account to code Fee Revenue to: Select a revenue account from your accounting system to charge this revenue too. We will create an invoice for the amount of the fee for this customer and code it to this nominated account.
- Tax Rate to apply to Fee: Select the tax rate that will apply to this charge. The rate will be applied as a Tax Exclusive rate. The tax rate % will be displayed in the "Per Transaction Tax %" below - you can't change this field. For Xero users, if the contact's default sales tax rate is set to something different then the customer's default sales tax rate will be used
These settings will be applied to the total amount to be collected and the collection amount will be increased. If you are trying to recover (for example) a 2.9% Stripe commission you will need to gross the % up by another 2.9% to account for the stripe fee on the additional fee. For example, $100 collected with a 2.9% fee will need to be set at $2.99 to ensure that the rate can absorb the full fee. $100 + 2.99% = $102.99. 2.9% of this amount is $2.99.
On each customer's profile you can switch this on or off manually. If you are activating it you should ensure that the customer is aware of this fee and has consented to it.
Once activated on the gateway new customers will automatically be setup to to pass fees on. If there are already customers assigned to this gateway when the feature is setup they will NOT be automatically enrolled. You will have to set them manually (or contact support for bulk changes). You should ensure that they are aware of this fee and have consented.
- This setting is separate from the Calculate Commission/Fees on Settlement. The former option records the fee in your ledger but does not charge it to the client. This option charges a fee to the client, but doesn't record your expense in your ledger.
- We can't adjust for variable commission rates. A single formula is applied.
- When a collection is made we add an invoice to the accounting system for the fee and mark it as paid so that the full amount collected shows on the customer's statement.
- Some gateways have the ability to automatically add the fee to the collection amount. If using the uCollect version you should ensure that the gateway version is NOT also added or the customer will be charged the fee twice.