How to Record the Bank Credit Card Merchant Fee Deducted from a Guest Card Settlement
Recognizing the bank's processing commission when credit card batch settlements are received net of the merchant fee.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash in Bank | Asset (+) | 97.50 | - |
| Credit Card Commission Expense | Expense (+) | 2.50 | - |
| Credit Cards Receivable | Asset (-) | - | 100.00 |
💡 Accountant's Note
When the bank settles credit card batches, they take a percentage (e.g., 2.5%). This is an administrative operating expense.
Practitioner & Systems Framework
💻 ERP Architecture
The bank settles credit card batches 1–3 days after the transaction, netting the merchant fee. The Credit Cards Receivable (at gross) is cleared to Cash (at net) with the difference expensed as Merchant Fees / Credit Card Commission. Under USALI, credit card commissions are classified in Administrative & General expenses (not Rooms). Monitor the effective merchant fee rate monthly — it should match the agreed rate in the merchant agreement. Track by card type (Visa, MC, Amex) as Amex typically charges a higher rate.
⚠️ Audit Flags
Auditors reconcile the total credit card settlements to the Credit Cards Receivable batch totals. Unexplained discrepancies between gross settled and net received (beyond the agreed fee rate) indicate either unauthorized charges by the bank or unrecorded chargebacks. Merchant fees must be presented gross (not netted against revenue) — netting against Room Revenue understates both revenue and expenses.
📄 Required Documentation
Merchant agreement (fee rates by card type), bank settlement statements, credit card batch reconciliation (gross vs. net settlement), Credit Cards Receivable clearing schedule, Credit Card Commission Expense ledger by card type, chargeback register, and monthly merchant fee rate analysis.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.