This article is part of a larger series on Accounting Software.
This tutorial will show you how to process credit card payments in QuickBooks Online using QuickBooks Payments. First, we’ll go over how to set up QuickBooks Payments as you’ll need an account to process payments, then we’ll look at how to record credit card payments using a sales receipt and a customer invoice.
This guide is one of our many free QuickBooks Online tutorials and is designed to help you use QuickBooks Online effectively, our top-recommended small business accounting software. To get the most from this, follow along in your account. If you don’t have a subscription, you have two options: a 30-day free trial or 50% off for three months.
How To Set Up QuickBooks Payments in QuickBooks Online
If you already have a QuickBooks Payments account, you can skip this part and jump to how to record a credit card payment using a sales receipt.
Step 1: Navigate To Payment Settings
Step 2: Apply for a QuickBooks Payments Account
If you already have a QuickBooks Payments account, you should proceed to step 3. If you don’t have one, you need to apply for an account by clicking on the green Learn more button in the Payments settings window.
After hitting Learn more, you’ll be taken to the QuickBooks Payments account application window consisting of three sections, as shown below.
- Payment deposit info: QuickBooks will ask which of your bank accounts should receive your credit card deposits and be charged credit card fees. If you haven’t already added a bank account to your chart of accounts, select a different bank account and hit the Add button. When you have selected the account, click the green Save button.
- Business info: You’ll be asked to provide business information, such as company name, business type, and business address.
- Personal info: QuickBooks will prompt you to provide personal information, including your full name, address, and phone number.
If it is your first time setting up QuickBooks Payments, then you should see a start button next to each section. Otherwise, you should see a View button, just like in the screenshot above (items B and C).
When all three sections are complete, click the green Get set up button at the bottom of the screen (not shown in our image).
Step 3: Review Payment Settings
Navigate to the payment settings screen as you did in Step 1. Now that you’ve signed up for QuickBooks Payments, your Payment settings screen should look like this:
- Merchant details: Click the green Manage account button to go to your QuickBooks Payments account.
- Deposit accounts: The bank account listed in this section will be used to deposit your credit card proceeds and withdraw processing fees. Changing the bank account here will not affect the QuickBooks account wherein the transactions are recorded.
- Chart of Accounts: This field 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.
Next, click on the drop-down menu next to Processing fees (under Charts of Accounts) and choose an expense account to charge your credit card processing fees. If the account is not yet in QuickBooks, you can create a new account by clicking on + Add New from the drop-down list that shows up when selecting an account. After selecting an expense account, click the green Save button.
How To Record a Credit Card Payment Using a Sales Receipt
You learned how to create and send sales receipts in an earlier tutorial. Now that you have a QuickBooks Payments account, you can issue sales receipts to record customer payments via credit cards, debit cards, and bank transfers.
Step 1: Create a Sales Receipt
Click + New at the top of the left menu bar and then select Sales receipt under Customers, the first column.
Step 2: Enter Credit Card Information
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.
After selecting the payment method, click on Enter credit card details to input the customer’s credit card account information.
After inputting all the credit card information, hit the green Use this info button. The credit card transaction hasn’t 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 redirected to the sales receipt screen.
Step 3: Save Sales Receipt & Process Credit Card Payment
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.
Step 4 (Optional): Verify the Credit Card Transaction Processed
Reopen the sales receipt by hovering over Sales in the left menu bar, clicking on All Sales, and then finding the sales receipt transaction you just created. After opening the sales receipt, verify that it reads “Transaction processed” under the Payment method.
Click on Transaction processed to view the details of the transaction.
You can either print the transaction details by clicking the Print button or issue a refund to the customer by hitting the Refund button.
How To Record a Credit Card Payment on an Invoice
This process is 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 clicking Sales.
Step 1: Navigate To the Receive Payment Screen
Step 2: Enter the Credit Card Information in the Receive Payment Screen
The Receive Payment screen should be completed as shown in our guide on how to receive payments—except the payment method should be changed to a credit card. Click the drop-down menu under Payment method and select the credit card processor.
Click Enter credit card details to open a window to input the customer’s credit card account information:
Once the credit card information is entered, click the green Use this info button to continue. The credit card hasn’t yet been charged, and you have 10 minutes to complete the transaction before the credit card information is removed.
Step 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.
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 won’t be reflected in your bank account register until the funds are transferred from QuickBooks Payments. Once the funds are in your bank, QuickBooks will record the deposits and related processing fees to the account registers you specified in the QuickBooks Payments options discussed above.
What Are the Benefits of Using a QuickBooks Payments Account?
- There’s nothing to install for QuickBooks Payments to work with QuickBooks Online.
- Your accounts and financial statements are always up-to-date since QuickBooks Payments is integrated into QuickBooks.
- Your customers can make payments online by clicking the Pay Now button on their emailed invoices.
- You can accept payments using your mobile device via the QuickBooks Online mobile app.
- Payments are deposited to your bank account, on average, within two or three business days after the transaction date.
Congratulations on completing another QuickBooks course. You just learned how to process credit card payments in QuickBooks Online through QuickBooks Payments. The next guide in our series of free QuickBooks tutorials is how to record credit card sales with a third-party credit card processor, which will teach you how to enter credit card sales when using a non-QuickBooks-integrated processor.