When a company accepts payment by credit card, the company incurs a transaction processing fee from a payment processing network (Visa, MasterCard, etc.). Thus, if a customer makes a $100 purchase, the company won't receive the full $100 due to the transaction processing fee.
Transaction processing fees (aka credit card fees or payment processing fees) are an operating expense and not a reduction of sales revenue. Thus, if a company accepts a credit card as payment for a $100 purchase, and the company is charged a transaction processing fee of 3%, the company would increase its cash account by $97, record a $3 expense, and record $100 of sales revenue.
Some companies apply a surcharge to transactions in which the customer pays with a credit card (to recoup the cost of the payment processing fees). If a company does assess a surcharge, this would increase the amount of cash received by the company (since it is collecting the surcharge) and increase the company's revenue.
—
Edspira is the creation of Michael McLaughlin, an awardwinning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a highquality business education freely available to the world.
—
SUBSCRIBE FOR A FREE 53PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44PAGE GUIDE TO U.S. TAXATION
• A 75PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
* http://eepurl.com/dIaa5z
—
SUPPORT EDSPIRA ON PATREON
* / prof_mclaughlin
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSETLIABILITY MANAGEMENT
* https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: https://podcasts.apple.com/us/podcast...
* Spotify: https://open.spotify.com/show/4WaNTqV...
* Website: https://www.edspira.com/podcast2/
—
GET TAX TIPS ON TIKTOK
* / prof_mclaughlin
—
ACCESS INDEX OF VIDEOS
* https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
* Facebook: / edspira
* Instagram: / edspiradotcom
* LinkedIn: / edspira
—
CONNECT WITH MICHAEL
* Twitter: / prof_mclaughlin
* LinkedIn: / profmichaelmclaughlin
—
ABOUT EDSPIRA AND ITS CREATOR
* https://www.edspira.com/about/
* https://michaelmclaughlin.com