How to record credit card surcharges on premiums
Recording the fee charged to clients to offset the merchant processing costs of paying insurance premiums via credit card.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Client Premium Receivable | Asset | 1,025.00 | - |
| Premium Payable to Carrier | Liability | - | 1,000.00 |
| Credit Card Surcharge Revenue | Revenue | - | 25.00 |
💡 Accountant's Note
The broker passes the credit card merchant fee to the client as a surcharge. The premium portion is owed to the carrier, while the surcharge is retained by the broker as other income to offset bank charges.
Practitioner & Systems Framework
💻 ERP Architecture
Configure as an automated fee line item in the policy billing module for credit card payment methods.
⚠️ Audit Flags
Compliance with regional laws regarding credit card surcharging; mismatch between bank merchant fees and surcharge revenue.
📄 Required Documentation
Merchant processing agreement, client invoice showing fee breakdown, bank statement.
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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.
Related Journal Entries
Insurance Broking & MGA
Insurance Commission — Recognized at Policy Inception/Renewal (Point-in-Time)
Insurance Broking & MGA
Contingent Commission / Profit Sharing — Variable Consideration Constrained Until Carrier Determination
Insurance Broking & MGA
Premium Trust Account — Client Premium Received (Not Broker Revenue — Fiduciary Obligation)
Discussion & Community Questions
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