Credit card processing fees are a harsh reality of running a business. Unfortunately, if someone pays you anything with a credit card you won’t actually be seeing the full amount in your bank account. A portion of it will undoubtedly go to fees.
People may not like credit card processing fees, but the alternatives are far worse. That’s why it’s important to reframe our perspectives and learn to deal with credit card processing fees appropriately.
Shop Around for Merchants
Different merchants and credit card processing services have different fees. I remember when I worked for a small recruiting company where we would process payments on a card reader and get the fee statement each month. Every single month my boss would practically rip her hair out trying to figure out the reasoning behind all the different fees.
Granted, we were using a traditional point of service card reader. This particular company charged different fees depending on which bank the card came from, what the credit card company was, what state the card was issued in, etc. To be honest, it was completely insane.
The good news is the internet has made it easier to shop around to find the best merchant fees. Due for example, uses PayPal and Stripe – both which have a very straightforward fee structure so you can actually plan for fees.
Calculate Credit Card Processing Fees into Your Rates
One of the easiest ways to deal with credit card processing fees is to calculate them into your rates. For example, if I have a coaching client who wants to split their payments I always charge extra money to account for the extra time spent accounting, fees and admin work. (Don’t worry, they know about this up front when choosing a payment plan.)
You can do the same with freelancing rates. Remember, you decide your rates. This means it’s up to you to account for the processing fees. You already account for other business expenses and credit card fees are no different.
Deduct Fees from Your Taxes
You can deduct credit card processing fees from your taxes. And guess what? Unlike dining or entertainment, there’s no limit as to how much you can claim. That means you can claim 100% of the credit card processing fees with no issue.
The important thing to remember is you need to stay organized. Use the proper accounting software to keep track of fees and run reports every time tax time comes around. If you’re paying the fees you’re going to want to make sure you deduct as much as possible to lower your tax burden.
As always, it’s recommended that you find a good accountant to help you do this. As a freelancer, taxes are not something you should be doing on your own.
Remind Yourself Of The Alternatives
If you’re still griping about credit card fees just remember that the alternatives are a whole lot worse. I’m sure you’d rather pay a fee than lose an entire payment because a client doesn’t get around to writing a check. It’s all about perspective, and this is one of those reality checks we need to think of whenever we’re freaking out about credit card fees.
Final Thoughts
Credit card processing fees are not the end of the world. You have the option to shop around and compare different merchants. You can also deduct fees from your taxes and calculate them into your rates. The truth is when it comes to fees you have a whole lot more control than you think.
