If you accept credit card payments from customers, you know how quickly processing fees can eat away at your profit. The good news is that many jurisdictions now allow businesses to pass these fees on to customers, as long as the rules in your region permit it.

In this tutorial, I’ll show you exactly how to add credit card surcharges in QuickBooks Online (QBO), how to categorize them properly, and how they show up on your Profit & Loss report.

Before you begin, check your local regulations to confirm whether surcharging is allowed in your area.

What You’ll Learn in This QuickBooks Online Tutorial

This guide is perfect for:

• Bookkeepers and accountants supporting clients
• Small business owners looking to recoup processing fees
• Anyone invoicing customers inside QuickBooks Online
• Users wanting clean and accurate financial reporting
  

In this walkthrough, you’ll learn how to:

• Create an invoice
• Enable credit card payments
• Add a surcharge as a product/service item
• Map fees to the correct account
• Calculate percentage-based fees
• Review how surcharges appear in your reports

Step 1: Create Your Invoice in QuickBooks Online

Start by creating an invoice through the + New button or the Sales > Invoices menu.

Add your customer and the products or services you’re selling.

For demonstration purposes in the video, I used “rock fountains” and “pumps” and disabled tax to keep everything simple.

Choose whichever invoice workflow you prefer; QuickBooks Online allows several paths.

Step 2: Make Sure Credit Card Payments Are Enabled

To apply a surcharge, your customer must have the option to pay by credit card.

You control this entirely:

• If you don’t want to accept cards, leave the setting disabled.
• If you do, you can turn it on under your payment settings.
  

If a customer decides to pay by ACH or cheque, you can adjust the invoice later to remove the credit card fee.

Step 3: Create a Product or Service for Credit Card Fees

QuickBooks requires a product or service item to add the fee to your invoice.

You can create this:

✔ Directly from the invoice using Add New, or

✔ From the Products and Services list

Name it clearly, such as Credit Card Surcharge or Credit Card Fee.

How to categorize the fee

You have two main options:

Option A: Offset your credit card expenses (Recommended)

Categorize the fee to your Credit Card Fees expense account.

This reduces your net expense and gives you a realistic picture of what you’re recouping.

Option B: Track the fee as income

You can map the fee to an income account.

I don’t recommend this (it’s not truly revenue), but it is allowed if it suits your reporting structure.

You can always adjust the category later through your Chart of Accounts.

Step 4: Add the Fee and Let QuickBooks Calculate It

QuickBooks allows you to enter formulas directly in amount fields.

For example, if your invoice subtotal is $580, you can enter:

580 * 0.03

QuickBooks will calculate the 3% surcharge automatically.

Add the fee item to the invoice, uncheck tax if needed, and review the totals.

Step 5: Send the Invoice to Your Customer

Preview the invoice, confirm the surcharge, and send it off.

In the sample company file, sending isn’t active but in your real QBO file, the customer will see the surcharge on their invoice.

Step 6: See How Credit Card Fees Appear on Your Profit & Loss Report

This step helps you confirm your setup is working.

If you mapped the fee to your Credit Card Fees expense account:

• The surcharge shows as a negative amount under your expense category
• This reduces your net credit card fees
• You can easily compare what you were charged vs. what you recouped
  

If you mapped it to income:

• It will appear as a separate income line
• Fees and expenses stay fully separate
  

Both are valid, it depends on how you want your reporting to look.

Why Adding the Fee Is NOT Enough (Important)

Adding surcharges helps recover costs, but managing what customers owe you is just as important.

Make sure you regularly run your Accounts Receivable Aging Report to confirm payments are coming in and your numbers are accurate.

My Month-End Checklist will walk you through the exact steps to stay on top of this.

Use this each month to ensure your financial information is complete, accurate, and easy to understand.

Helpful QuickBooks Resources

QuickBooks Online Plan Comparison: https://www.mycloudbookkeeping.org/quickbooks-plan-comparison

Got questions? Book a call: https://www.mycloudbookkeeping.org/consultation

Adding credit card fees in QuickBooks Online is simple once your setup is correct and it can make a meaningful impact on your profit margins. Just remember to check your local regulations before you start charging customers.

If you have questions about your setup, feel free to leave a comment below.

I’d love to hear from you!

Hi, Kerry here from My Cloud Bookkeeping. I work with small businesses and entrepreneurs to help them manage their business finances in QuickBooks Online.

If you’re not sure if you’re using the best plan for your business, you can check out my plan comparison below. And be sure to watch right to the end for useful tips for your business.

Some jurisdictions now allow you to pass on the cost of credit card processing to your customers. This is not the case everywhere, so make sure you’re allowed to do this before adding the charge to your customer’s invoices.

If this is an option for you, let’s dive in and set it up.

Here we are in the sample company and we want to charge our customer for recent purchases. I’m going to pop up to the Create button—this is where I tend to go to create an invoice. You probably have your own favorite place to do this, but this is what I do.

We’ll add a customer. Let’s just go with Dylan today. Then we’ll scroll down and have a look at our products and services. I’m going to close the AI off—we’ll talk about that another day.

Let’s see what we’re going to sell to Dylan today. I love selling rock fountains, so let’s sell him two rock fountains. We’ll also sell him a pump. Actually, we probably need two pumps if we’ve got two rock fountains. I’m going to uncheck tax because I want to make this as simple as possible.

And we’re going to allow Dylan to pay us by credit card.

Someone asked me in a prior video: how do you know how people are going to pay you? You need to turn on the option to enable credit card payments. In your own QuickBooks file, you can set this up under your payment settings. I’m in the sample company here, so I can’t turn that on. But you can give customers the option to pay via credit card, and you’re always in control of that.

If you are giving people the option to pay by credit card, you can also tell them there will be a service charge. I’m going to stick with a simple 3% here. So, for example, 550 plus 30 gives us 580, and 580 × 0.03 gives us a $17.40 surcharge to allow him to pay by credit card.

If you’ve added the credit card option and someone pays without using a credit card, you can adjust the invoice later. We’ll talk about that shortly.

Next, we need a product or service item for the credit card fee.

Someone once commented that as a data architect, he would never create items this way. Yes, you can exit the invoice, go to Products and Services, and set the item up there. I’m shortcutting here by creating it directly from the invoice.

So I’ll click Add New, and you’ll see the new product/service window pop up on the right.

I’m going to call it Credit Card Surcharge. Then we need to map it to where we want it to show up in the Income Statement (Profit & Loss).

In a previous video, I created a Chart of Accounts expense account called “Credit Card Fees.” Let’s see if it’s here—yes, there it is, and it’s an expense. There are multiple ways to do this. I’m choosing to offset the surcharge against the credit card expenses that I pay. That way, when I receive these fees, they reduce my expense. You could also create a sub-account like “Credit Card Fees Recouped.” You could also map it to an income account. I don’t love having it in income—it’s not truly sales—but it depends on what makes sense for your business.

Even though it shows as an “income account” in this setup window, I am mapping it to an expense account because that’s where my credit card fees live.

So I’ll save and close that.

Now I have the surcharge item. I determined it should be $17.40, so I’ll enter that and uncheck tax. Then we can hit Review and Send.

One of the nice things about the sample company is that it lets us pretend to send something. “Dear Dylan, here’s your invoice…” and so on. We can preview it, but the system won’t actually send because it’s the sample company.

Let’s make sure we save the invoice so we can look at the fees on our reports.

Now we’ll leave invoices and go to Reports.

Here we are in the Profit and Loss report. I’m scrolling down to the Credit Card Fees expense line. We can see the total is $12.60. Let’s click through.

Here we see our $30 expense. And here is the invoice to Dylan, where the $17.40 surcharge offset part of that expense. So the net amount showing is $12.60.

As I mentioned earlier, you could also categorize this differently. You could have “Credit Card Fees” as $30 and then “Credit Card Fees Recouped” showing –$17.40 under it. Or you could show it as income instead. I prefer to offset the expense—it feels cleaner—but the most important thing is choosing what makes sense for your business.

Think about how you want these amounts to show up on your reports. It’s very easy to move things around later if you change your mind. Check out my video on how to add and edit accounts and categories in the Chart of Accounts—that will walk you through reclassifying things if necessary.

Hopefully this helps you set up the surcharge to recoup some of your credit card costs. But remember: adding the fee isn’t enough. To stay on top of what customers owe you, it’s important to regularly run your Accounts Receivable report.

Download my Month-End Checklist below to make sure you’re getting all the information you need each month, and that what you’re looking at is accurate.

If you have any questions or comments, please leave a note below. I’d love to hear from you.

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