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Accounting | How To

How to Process Credit Card Payments in QuickBooks Online

Updated October 26, 2021

Tim Yoder

WRITTEN BY: Tim Yoder

Published December 1, 2020

Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience. He brings his expertise to Fit Small Business’s accounting content.

This article is part of a larger series on Accounting Software.

Learn More With Our QuickBooks Online Course
Explore the chapters in the guide.
  1. How to Set Up QuickBooks Online
  2. Part 1: Setting Up QuickBooks
    1. How to Set Up Company Information
    2. How to Customize Invoices, Sales Receipts & Estimates
    3. How to Set Up Invoices, Sales Receipts & Estimates
    4. How to Set Up Products and Services
    5. How to Set Up Messages
    6. How to Set Up Statements
    7. How to Set Up Expenses
    8. How to Set Up Advanced Settings
  3. Part 1: Setting Up QuickBooks (Cont.)
    1. How to Import Bank Transactions
    2. How to Import Credit Card Transactions
    3. How to Set Up Multiple Users
    4. How to Set Up the Chart of Accounts
    5. How to Set Up the Products and Services List
    6. How to Set Up Customers
    7. How to Set Up Vendors
  4. Part 2: Managing Sales and Income
    1. How to Create Estimates (Quotes or Bids)
    2. How to Create and Send Invoices
    3. How to Receive Payments
    4. How to Create & Send Sales Receipts
  5. Part 3: Managing Bills and Expenses
    1. How to Write & Print Checks
    2. How to Enter Bills
    3. How to Pay Bills
  6. Part 4: Managing Banking Transactions
    1. How to Enter Banking Transactions Manually
    2. How to Manage Downloaded Banking Transactions
    3. How to Record Bank Deposits
    4. How to Transfer Funds Between Bank Accounts
    5. How to Handle Bounced Checks From Customers
    6. How to Process Bank Reconciliation
  7. Part 5: Managing Business Credit Card Transactions
    1. How to Enter Business Credit Card Transactions Manually
    2. How to Manage Downloaded Business Credit Card Transactions
    3. How to Enter a Credit Card Refund
    4. How to Reconcile Business Credit Card Accounts
  8. Part 6: Managing Credit Card Sales
    1. How to Manage Credit Card Sales With QuickBooks Payments
    2. How to Manage Credit Card Sales With a Third-party Credit Card Processor
  9. Part 7: Set Up and Manage Payroll
    1. How Set Up and Run Payroll
    2. How to Manage Payroll Tax
    3. How to Add Historical Payroll Data
    4. How to Set Up Automatic Deposits
    5. How to Print Payroll Checks
    6. How to Run Payroll Reports
    7. How to Reconcile Payroll Liabilities
  10. Part 8: Reporting in QuickBooks Online
    1. How to Run a Profit and Loss Statement
    2. How to Run a Balance Sheet Report
    3. How to Run a Statement of Cash Flows
    4. How to Run an A/R Aging Report
    5. How to Run an A/P Aging Report

Quickbooks Online
In this tutorial, we’ll show you how to process a credit card payment in QuickBooks Online using QuickBooks Payments (formerly known as Intuit Merchant Services). When you accept credit card payments in QuickBooks Online via QuickBooks Payments, the revenue, cash received, and processing fee will be reflected in the proper accounts automatically after the payments are processed.

We’re delighted you’re taking the time to learn QuickBooks Online, our best overall pick for small business accounting software. This tutorial is designed for you to follow along in your own QuickBooks Online account. New subscribers can choose from a 30-day free trial or 50% off for three months.

Visit QuickBooks Online

This tutorial is one of our Free QuickBooks Tutorials. The step-by-step instructions that follow the video offer detailed instructions with screenshots from the most recent version of QuickBooks Online.

Why You Should Accept Credit Card Payments

Nowadays, most people don’t carry cash, and few people write checks. According to a study by the Federal Reserve, only 10% of payments $25 or more were made in cash during 2018 for their sample group of consumers. Nearly every small business needs to accept credit cards as a form of payment.

While accepting credit card payments will cost you a fee, it will likely pay for itself with better cash flow. Customers can pay online immediately upon receiving an emailed invoice, rather than printing out the email and hoping it doesn’t get lost by the next time they decide to write checks.

What Are the Benefits of using a QuickBooks Payments Account?

One of the benefits of using QuickBooks Online is the ability to sign up for QuickBooks Payments. Some of the benefits of using QuickBooks Payments are:

  • There is nothing to install for QuickBooks Payments to work with QuickBooks Online.
  • Since QuickBooks Payments is integrated into QuickBooks, your accounts and financial statements are always up-to-date.
  • By clicking the Pay Now button on their emailed invoices, your customers can make payments online.
  • Using the QuickBooks Online Mobile App, you can accept payments using your mobile device.
  • Payments are deposited to your bank account, on average, within two or three business days after the transaction date.

Setting Up QuickBooks Payments in QuickBooks Online

Before accepting credit card payments, you need to set up your QuickBooks Payments account through QuickBooks Online following these steps:

  1. Navigate to Payment settings by clicking on the gear icon, choosing Account and Settings, and then clicking Payments.
  2. Start the QuickBooks Payments application by clicking Learn more.
  3. Designate a QuickBooks bank account for deposits.
  4. Review Payments settings and choose an expense account for processing fees.

1. Navigate to Payment Settings

Click on the gear icon in the upper-right corner of your QuickBooks Online screen and then select Account and settings under Your Company in the first column:

Account and Settings in QuickBooks Online

Navigate to Account and settings in QuickBooks Online.

From the Account and Settings screen, click on Payments in the left menu bar:

Payments settings in QuickBooks Online

Navigate to Payments settings in QuickBooks Online.

2. Apply for a QuickBooks Payments Account

To apply for a QuickBooks Payments account, click on the green Learn More button in QuickBooks Online Payments settings:

QuickBooks Payments Application in QuickBooks Online

Start a QuickBooks Payments application in QuickBooks Online.

After clicking Learn more, you’ll be taken to the Payments account application consisting of three sections: Business info, Personal info, and Bank:

QuickBooks Payments Account Application

QuickBooks Payments account application.

Click Start and follow the onscreen instructions to complete each section. When all three sections are complete, click the green Activate Payments button on the bottom of the screen.

3. Designate Bank Account for Payments

After activating your payments account, QuickBooks will ask which of your bank accounts should receive your credit card deposits and be charged for your credit card fees:

Bank Account to Receive Credit Card Deposits

Choose a bank account to receive credit card deposits.

Click the drop-down box under Bank account and choose the account where funds should be deposited. If you haven’t already added the bank account to your chart of accounts, click Add New from the drop-down box. When you have selected the account, click the green Save button.

4. Review Payment Settings

Navigate to the payment settings screen as you did in step one by clicking on the gear icon, selecting Account and settings, and then clicking on Payments. Now that you’ve signed up for QuickBooks Payments, your payment settings screen looks like this:

Review Payment Settings in QuickBooks Online

Review payment settings in QuickBooks Online.

  1. Merchant Details: Click the green Manage account button to be taken to your QuickBooks Payments account.
  2. Deposit Accounts: The bank account listed in this section will be used to deposit your credit card proceeds as well as withdraw processing fees. Changing the bank account here will not affect the QuickBooks account in which the transactions are recorded.
  3. Chart of Accounts: This section identifies the QuickBooks bank account to record deposits and the QuickBooks expense account to categorize the processing fees. To designate an account to record processing fees, click anywhere in the Chart of Accounts section:
Record Credit Card Processing Fees

Select an account to record Credit Card Processing Fees.

Click on the drop-down menu next to Processing fees and choose an expense account to accumulate your credit card processing fees. You can select Add New to create a new account. After selecting an expense account, click the green Save button.

Record a Credit Card Payment Using a Sales Receipt

You learned to create and sent sales receipts in an earlier tutorial. Now that you have a QuickBooks Payments account, you can also issue sales receipts to record customer payments via credit cards, debit cards, and bank transfers. Follow these steps to process a credit card payment in QuickBooks Online with a sales receipt:

  1. Create a new sales receipt.
  2. Choose the type of credit card under Payment method and click Enter Credit Card Details.
  3. Save and send the sales receipt to process the transaction.
  4. Verify the credit card transaction processed by reopening the sales receipt and clicking Transaction processed under Payment method.

1. Create a Sales Receipt

Click New at the top of the left menu bar and then select Sales receipt under customers in the first column:

Sales Receipt in QuickBooks Online

Create a new Sales receipt in QuickBooks Online.

2. Enter Credit Card Information

Most of the sales receipt will be completed the same as if you’re receiving cash or check, as explained in the prior tutorial. To accept payment via a credit card, debit card, or bank transfer, click the drop-down box under Payment method and choose the form of payment:

Process Credit Card Payments With Sales Receipts

Process credit card payments with Sales Receipts.

After selecting the payment method, click on Enter credit card details to input the customer’s credit card account information:

Enter Customer Credit Card Information

Enter customer Credit Card Information.

After inputting all the credit card information, click Use this info. The credit card transaction has not yet been processed, and you’ll receive a message that you have 10 minutes to process the transaction before the credit card information is removed from the sales receipt. After acknowledging you have 10 minutes, you’ll be returned to the sales receipt screen.

3. Save Sales Receipt and Process Credit Card Payment

Sales Receipt with Credit Card Information

Sales Receipt with credit card information.

The Sales Receipt screen now shows the last four digits of the credit card number that will be charged. To process the transaction, click the green Save and send button.

4. Verify the Credit Card Transaction Processed (Optional)

Reopen the Sales Receipt by hovering over Sales in the left menu bar, clicking on All Sales, and then find the sales receipt transaction you just created. After opening the sales receipt, verify that it reads “Transaction processed” under the Payment method:

Verify the Credit Card Payment Processed on a Sales Receipt

Verify the credit card payment processed on a sales receipt.

Click on Transaction processed to view the details of the transaction.

View the Credit Card Transaction Receipt

View the credit card Transaction Receipt.

You can print the transaction details by clicking the Print button or issue a refund to the customer by clicking Refund.

Record a Credit Card Payment on an Invoice

You can record a credit card payment on an outstanding invoice manually by following these steps:

  1. Open a Receive Payment screen by clicking New above the left menu bar and selecting Receive Payment in the first column under Customers.
  2. Enter the credit card information in the Receive Payment screen.
  3. Save the payment to process the credit card transaction.

Save time: These steps are unnecessary if your customer pays an invoice online by clicking Pay Invoice in the email sent to them. You can enable online payments by clicking the gear icon in the upper-right corner of the screen, selecting Company settings in the first column, and then selecting Sales.

1. Navigate to the Receive Payment Screen

Click on New above the left menu bar and then select Receive Payment in the first column:

Receive Payment Screen in QuickBooks Online

Open a Receive payment screen in QuickBooks Online.

2. Enter the Credit Card Information in the Receive Payment Screen

The receive payment screen should be completed as shown in a prior tutorial, except the payment should be changed to a credit card. Click the drop-down menu under Payment method and select the type of credit card:

Enter Payment Method for an Invoice Payment

Enter Payment method for an invoice payment.

Click the Enter credit card details to open a window to input the customer’s credit card account information:

Enter Credit Card Information to Receive Payment on an Invoice

Enter Credit Card Information to receive payment on an invoice.

Once the credit card information is entered, click the Use this info button to continue. The credit card has not yet been charged, and you have 10 minutes to complete the transaction before the credit card information is removed.

3. Save the Payment to Process the Credit Card Transaction

The receive payment screen will now show the last four numbers of the credit card to be charged:

Receive Payment Screen With Credit Card Information

Receive Payment screen with credit card information.

Click the green Save and close button to process the credit card transaction and charge your customer’s credit card.

What Happens Next

The credit card payments you received will not be reflected in your bank account register until the funds are transferred from QuickBooks Payments. Once the funds are transferred to your bank, QuickBooks will record the deposits and related processing fees to the account registers you specified in the QuickBooks Payment options discussed above.

Wrap Up

Congratulations on finishing another of our QuickBooks tutorials. You can now process credit card transactions using QuickBooks Payments. The next tutorial in our QuickBooks Online Training Course is How to Manage Credit Card Sales with a Third-party Credit Card Processor, where we’ll teach you how to enter credit card sales when using a non-integrated credit card processor.

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About the Author

Tim Yoder

Find Timothy OnLinkedIn

Tim Yoder

Tim worked as a tax professional for BKD, LLP before returning to school and receiving his Ph.D. from Penn State. He then taught tax and accounting to undergraduate and graduate students as an assistant professor at both the University of Nebraska-Omaha and Mississippi State University. Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor for both the Online and Desktop products, as well as a CPA with 25 years of experience. He most recently spent two years as the accountant at a commercial roofing company utilizing QuickBooks Desktop to compile financials, job cost, and run payroll.

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