Credit Card Surcharges

The credit card surcharge is an additional fee that merchants can apply to recover processing costs. The surcharge amount is determined by card brand (Visa or Mastercard). This amount is tracked for accounting and reporting purposes to ensure transparency and compliance.

The credit card gateway provider, such as CenPOS, must perform these actions as a prerequisite:

  • Enable the Surcharge feature for the distributor.
  • Define the surcharge percentage for each card brand.
  • Inform customers about the surcharge.

To enable the Surcharge feature in the application, the Surcharge check box must be selected on the Credit Card Interface Parameters form, which is an application-level setting and cannot be modified for individual orders. When this check box is selected:

  • The Default Authorization field is automatically set to 100 percent, and the surcharge is applied to the full invoice amount, including taxes, during credit card authorization.
  • The Surcharge Account fields are displayed wherein the surcharge account parameters must be specified.

When the Order To Be Invoiced or Contracts To Be Invoiced report is generated for service orders or contracts, the invoice total amount is calculated including all charges and taxes. The Authorize Credit Card option can be selected to access the Credit Card Payment Information form, wherein a new credit card details can be specified, or a stored card can be selected. When Repeat Authorization is submitted, the Surcharge Disclosure window is displayed with the surcharge details such as, surcharge percentage and amount applied, along with the information required to disclose the surcharges to the customer, according to the surcharge disclaimer regulations. The customers can select one of these options:

  • Submit: To accept the surcharge and proceed with the authorization.
  • Cancel: To avoid the surcharges and pay using other methods, such as debit card or Accounts Receivable (A/R).

After authorization is completed, the Credit Card Web Payment form is displayed, with the preview of the receipt including surcharge in transaction details. If the Done option is selected to complete the authorization, the Web Response window is displayed with details, and the authorization transaction is added as type Authorize on the Credit Card Transactions form.

The Order Invoice Listing form can be accessed from the Service Orders to view the surcharge details. After the invoice is created, the transaction type Force is created on the Credit Card Transactions form and authorization is linked to the invoice. The invoices are generated using IDM templates, imported configurations and the configured fields from the IDM Report Templates form. These invoices can be viewed in the Infor Document Management (IDM) application. Each invoice displays surcharge amount and pending due amount after deducting the authorized amount.

Note: If invoices are created using other applications, the invoice templates must be updated manually to include surcharge information.

If multiple invoices are created for a service order or contract, the surcharge is applied to the subsequent authorizations, based on the card type used during initial authorization. Possible scenarios:

  • One-Time Card: The new card is used for initial authorization, and the Store For Future Orders check box is cleared. The card details are not stored for One-Time credit card. However, the surcharge percentage and amount are stored. The subsequent authorizations are recorded as ReAuth transactions, on the Credit Card Transactions form. The surcharge for subsequent transactions is calculated using the initial authorization percentage. The total surcharge for all invoices in the order or contract is capped at the initial authorization amount. For example:

    • Initial authorization amount (including tax): 120
    • Surcharge percentage set by the gateway provider: 1.5%
    • Surcharge amount for the initial authorization: (120*1.5)/100 = 1.8

    The bill amounts for the subsequent invoices are as follows:

    • Invoice 1: 150
    • Invoice 2: 80
    • Invoice 3: 320

    The surcharge amount for the subsequent invoices is calculated and capped as follows:

    • Invoice 1: (150*1.5)/100 = 2.25. This is capped at 1.8.
    • Invoice 2: (80*1.5)/100 = 1.2. Surcharge is not collected for this invoice.
    • Invoice 3: (320*1.5)/100 = 4.8. Surcharge is not collected for this invoice.
    Note: The surcharge for 2nd and 3rd invoices is zero, because the maximum surcharge amount of 1.8 (based on the initial authorization) is already collected with 1st invoice. After invoicing, the ForceSale transactions are created on the Credit Card Transactions form.

  • Stored Card: The stored card is used for initial authorization, which can be an existing card saved for the customer, or a new card added by selecting the Store For Future Orders check box. When selected, the card details along with the surcharge percentage and amount are stored. The subsequent authorizations are recorded as RecurringSale2 transaction on the Credit Card Transactions form. For stored cards, the Surcharge Disclosure window displays a message that the surcharge is applicable to all subsequent transactions. If the customer agrees to the disclosure, the surcharge for each subsequent transaction is calculated using the initial authorization percentage. For example:

    • Initial authorization amount (including tax): 120
    • Surcharge percentage set by the gateway provider: 1.5%
    • Surcharge amount for the initial authorization: (120*1.5)/100 = 1.8

    The bill amounts for the subsequent invoices are as follows:

    • Invoice 1: 150
    • Invoice 2: 80
    • Invoice 3: 320

    The surcharge amount for the subsequent invoices is calculated as follows:

    • Invoice 1: (150*1.5)/100 = 2.25
    • Invoice 2: (80*1.5)/100 = 1.2
    • Invoice 3: (320*1.5)/100 = 4.8

    After invoicing, the ForceSale transactions are created on the Credit Card Transactions form.

When a credit card transaction is completed, the General Ledger (GL) updates this information:

  • Accounts Receivable (A/R) payment is created including the surcharge.
  • The A/R account is credited with the original amount and a journal entry is created for the original amount.
  • A surcharge amount distribution is created for the surcharge account, the surcharge liability account is credited with the surcharge amount, and a journal entry is created for the surcharge amount.

If the payment is linked to an invoice, the A/R payment includes the Invoice Number and Apply To Invoice information. The surcharge distribution is not linked to the invoice to avoid the impact on the customer and invoice balances. The Order Invoice Listing option can be selected to access the Order Invoice Listing form to view the surcharge and A/R amount paid for a service order.

Note: 
  • When an Accounts Payable (AP) voucher is created to settle surcharges, the Credit Surcharge Payable account is cleared instead of the Credit Surcharge Expense account.

  • If ISM is integrated with Distribution SX.e, the surcharge information is copied to the associated sales order. This information is displayed on:

    • The Credit Card Details and Tender History Details sections of the Sales Order Inquiry - Header screen.
    • The Order Totals section of the Sales Order Inquiry - Totals screen.

    The surcharge account must be specified for the corresponding credit card processor on the SA Credit Card Processor Setup screen.

  • Authorization of a service order or contract is recommended only after invoice total has been confirmed.