Understanding Surcharges with Benji Pays

TABLE OF CONTENTS

• What is a Surcharge?
• Legal Considerations
• Types of Surcharge 
• Benefits of Using Benji Pays Surcharging  
• Setting up Benji Pays Managed Surcharging - Company Level 
• Surcharge Popup
• Configuration and Settings
• What accounting transactions are created
• How to record surcharge liability offset for Gateway Managed Surcharging accounts 
• Processing Refund with Surcharge

What is a Surcharge?

A surcharge is an additional fee that merchants may apply to transactions, often to offset the cost of payment processing fees. These fees are typically incurred during credit or debit card transactions, where a percentage of the transaction value is taken as a processing fee by card networks or financial institutions. By implementing a surcharge, merchants can recover some or all of these costs without directly absorbing them into their operating expenses.

For example, if a customer’s transaction amount is $100 and the surcharge is set at 2.5%, the total amount charged to the customer will be $102.50.

Legal Considerations

When implementing surcharges, merchants must comply with local laws and card network regulations. Some regions have restrictions on surcharges or require specific disclosures. Key considerations include:

1. Disclosure: Customers must be informed about the surcharge before completing the transaction.

2. Limits: Many card networks, such as Visa and Mastercard, cap the maximum allowable surcharge percentage.

3. Prohibited Locations: Certain regions or countries may prohibit surcharges altogether, so merchants should check local laws before implementation.

For more information regarding regulations related to Surcharging please refer to this article. 

Here is a flowchart that provides a visual representation of how surcharging works in Benji Pays.

Types of Surcharge 

Benji Pays Managed Surcharging

In this type of surcharging, Benji Pays takes full control of enabling and managing the surcharges. The surcharge amount is automatically added to each charge processed through Benji Pays, simplifying the process for merchants and ensuring accurate surcharge calculation.

Gateway Managed Surcharging

Gateway managed surcharging is facilitated by your payment gateway. With this approach, Benji Pays sends the transaction amount to the gateway, and your gateway then determines whether a surcharge should be applied. The gateway calculates the surcharge, adds it to the total charge amount, and sends the final amount back to Benji Pays.  

Please be aware in regards to Gateway Managed Surcharging that Benji Pays does not control whether surcharges are applied by your payment gateway. The application of surcharges is determined solely by your payment gateway's policies and settings.

Elavon Converge and Clover both support Gateway Managed Surcharging.

Benefits of Using Benji Pays Surcharging  

With Benji Pays managed surcharging, merchants have more control over surcharges compared to Gateway managed surcharging.

• 1. Each Customer Can Have Surcharging Disabled: Merchants have the option to disable surcharging for individual customers, affecting all their invoices and payment profiles.

• 2. Payment Profiles Can Have Surcharging Disabled: Disabling surcharging for a payment profile affects only the charges associated with that specific profile. Other payment profiles for the same customer will still be subject to surcharges if enabled.

Setting up Benji Pays Managed Surcharging - Company Level 

To enable surcharging on your gateway connection:

1. Go to "Settings >> Payment Gateway Settings".           

2. Add a new gateway or edit an existing one.

3. In the gateway settings scroll until you see Benji Pays Surcharging and toggle the switch to enable surcharging.

4. Choose an income account.

5. Set your surcharge rate.

6. Save your gateway.

Your surcharging is now enabled for all payments. 

You can follow the same steps if needed to adjust the account your surcharge is posted.  

Surcharge Popup

In Benji Pays, you have two options for informing your customers about the surcharge fee. Both these setting are on the same screen as setting up your surcharge.

This video will walk you through setting up surcharging, pop up communication.

Configuration and Settings

With Benji Pays managed surcharging, merchants have more control over surcharges compared to Gateway managed surcharging. By default, surcharging is activated for all customers within your system. However, you have the flexibility to control the surcharging status on a customer and payment profile level. With Gateway Managed surcharging (Not Benji Pays Managed Surcharging), Benji Pays does not have the capability to disable the charge at customer or payment profile level.

1. Each Customer Can Have Surcharging Disabled: Merchants have the option to disable surcharging for individual customers, affecting all their invoices and payment profiles.

• Navigate to the Customers section.
• Locate the specific customer for whom you want to disable surcharging and click their name.
• Click on the gear icon associated with the customer.
• In the window that opens, find the option to disable surcharging.
• Toggle off the surcharging option and remember to save your changes.

2. Payment Profiles Can Have Surcharging Disabled: Disabling surcharging for a payment profile affects only the charges associated with that specific profile. Other payment profiles for the same customer will still be subject to surcharges if enabled.

• Identify the payment profile that needs surcharging to be disabled.
• Click the edit (pencil) icon linked to that payment profile.
• Within the profile editing window, you'll find the surcharging option.
• Turn off the surcharging setting at the bottom of the profile.
• Be sure to save the changes to update the payment profile.

This approach grants you precise control over which customers and payment profiles have surcharging enabled or disabled according to your specific business requirements.

You can also do this in bulk on the Customers and Profiles pages (access from the left menu) by selecting multiple entries and then using the options under the Batch Actions button on those pages.

This video will walk you through the steps.

Important note!!

Benji Pays prioritizes adding surcharges to credit cards to align regulations. However, this strategy is only possible if the gateway can identify card types prior to charge processing. Not all supported gateways offer this feature.

Here's a breakdown of how different gateways handle surcharges:

By default, Credit cards will always have a surcharge added.

Visa / MasterCard Debit cards can not be identified, and will have a surcharge added with these gateways:

• Bambora
• Global Payments
• Helcim

What accounting transactions are created

For accounting purposes, the following transactions are generated:

QuickBooks Online and QuickBooks Desktop: A journal entry is created that debits the customer's accounts receivable account and credits either an income account (Benji Pays managed surcharging) or a liability account (gateway managed surcharging). A payment is then generated for the full transaction amount, linked to the journal entry and the invoice paid. 

Journal Entry numbers:

For QuickBooks Online, Benji Pays let's QuickBooks generate a journal entry number unless the "Warn if duplicate journal entry number is used" setting is turned on.  If this setting is ON, QuickBooks requires us to provide a journal entry number.  

You can find this setting in QuickBooks Online under the gear icon >> Account and Settings >> Advanced >> Other Preferences

Xero: The original charge amount is applied as a payment to the invoice. A separate receive money transaction is generated for the surcharge, posted to an income account (Benji Pays managed surcharging) or a liability account (gateway managed surcharging).

How to record surcharge liability offset for Gateway Managed Surcharging accounts 

If your surcharge settings are controlled by your payment processor in your gateway (Elavon Converge and Clover only), here is how to deal with the surcharge portion of the payment that Benji Pays adds via Journal Entry when marking your invoices as paid. 

Processing Refund with Surcharge 

When you refund a transaction, the fees charged by your Payment Gateway provider are not returned to your account. However you can choose to include the surcharge amount in your refund amount. This article with guide you through the steps.