How to Record Card Tips Added to the POS Bill Net of Processing Fees
Recording a tip added to a card payment, with the bank processing fee absorbed by the restaurant.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash in Bank (Net) | Asset (+) | 9.75 | - |
| Bank Processing Fees | Expense (+) | 0.25 | - |
| Tips Payable to Staff | Liability (+) | - | 10.00 |
💡 Accountant's Note
Card tips come in net of the bank's processing fee. The restaurant absorbs the fee but must still pass the full tip amount to the staff.
Practitioner & Systems Framework
💻 ERP Architecture
Some restaurants deduct the card processing fee from card tips before distributing — this is a contentious practice. Under best practice (and increasingly, labor regulations), the full tip should be paid to staff and the restaurant absorbs the fee as a cost of accepting cards. Configure the GL so that Tips Payable to Staff always shows the gross tip, and Bank Processing Fees absorbs the fee separately.
⚠️ Audit Flags
If card tips are distributed net of processing fees without a clear written policy communicated to staff, this may constitute an unlawful deduction from wages under Jordanian labor law. Document your tip distribution policy in the employment contracts. Auditors may also ask whether card tips are included in the SSC and income tax calculation for high-earning servers.
📄 Required Documentation
POS card tip report, bank merchant settlement confirming the net tip received, Bank Processing Fees ledger, tip distribution record (gross amount per employee), and written tip distribution policy.
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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.