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Can I Charge My Clients Back for Credit Card Processing Fees?

Objective:

  • Can Credit Card surcharges be added to Bills
  • How do I charge my Client's for the LawPay processing fees?
  • Can I change an automatic administrative fee which is dependent on the amount Billed?
  • Can I incorporate the LawPay credit card processing fees inside a generated Bill?

Environment:

  • Clio Manage

Additional Information:

  • Credit Card surcharges are not legal in every state. Please refer to this list of statutes and ensure that you're permitted to surcharge your Client.
  • You can only surcharge up to the amount charged by the payment processor. This means that if LawPay charges 1.95%, the maximum allowed surcharge is 1.95%.
  • Credit Card surcharges are not legal in Canada.
  • If the Client is paying the surcharge by Credit Card, LawPay will charge a surcharge on the surcharge—this means that while you can recover the majority of the fee, it's essentially impossible to recover 100%.
  • For information on how to set up Taxes, please click here.

Answer:

Our best recommendation is to blend the processing fee into your billing rate, by increasing your hourly billing rate by 3%. For example: Bill is Services for $1,000, increased to $1,030 - client pays $1,030 via credit card using Clio Payments - LawPay charges your firm $30.90 to process that, the resulting cost to your firm is only 90 cents. This is better than adding it as an Expense since it will affect all clients across the board, it is unseen by the client so they won't know there is an additional fee for paying via credit card and research shows that clients who pay via credit card will pay faster. This is better than applying a 3% Tax because if you choose to integrate your Clio Manage Account with accounting software, such as QuickBooks Online or Xero, it won't affect your reconciliation.

Having said that, if you wish, you can use our Tax function to add other types of surcharges like credit card processing fees to Bills:

  1. Go to Settings
  2. Navigate to Billing under the 'Clio Settings' column
  3. Scroll down to 'Taxes' and create and name a Secondary Tax for whatever % you want to charge for card processing
  4. Tick Enable Secondary Tax 
  5. On the next credit card bill you generate, be sure to tick the 'Apply Secondary Tax' box

Alternatively, you could choose to create an Expense Activity Category and include the fee in your total charge. If the client ends up paying by another means ( cash, check, ACH), prior to recording the Payment, you could apply a percentage discount based on the surcharge. 

 

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