The Hidden Cost of Convenience: How Merchant Fees Chip Away at Your Profit
Swipe, tap, insert—however your customers pay, one thing is certain: every card transaction comes with a cost. Whether you’re a performance shop, service professional, mobile mechanic, or race team selling merch at the track, merchant fees can quietly eat into your profit more than you realize.
From Square to Shop Monkey, QuickBooks Payments to Venmo, convenience fees are part of doing business. But if your books aren’t separating and reconciling those fees correctly, you may be losing far more than a few dollars per sale.
Let’s break down what these fees really cost, when you can legally pass them on, and how to make sure your processor reports match what hits your bank—and your QuickBooks file.
What Merchant Fees Are Really Costing You
Every time a customer pays by card, you pay for the privilege. Most processors charge:
2.5%–4% per transaction, plus
A flat fee per swipe/tap/insert
That means a $1,000 parts order or repair ticket could cost you $25–$40 in fees—gone instantly. Multiply that across every sale, every week, all year long, and the total can rival what you spend on rent, insurance, or even payroll.
There are dozens of processors out there, and yes, you might save a little by switching. But constant hopping creates headaches, setup issues, integration problems, and rarely saves enough to justify the effort.
What matters more is understanding that merchant fees lower your net profit, not just your bank balance. If your bookkeeping system lumps fees into income instead of separating them, your financial statements won’t show the true story. And that’s when margins get misleading.
Can You Pass Fees to Customers? Sometimes—But Not Always
Surcharging and cash-discount programs are more common than ever. But it’s not the Wild West—there are real rules:
You can potentially pass fees on if:
✔ It’s legal in your state
✔ The program is compliant
✔ You disclose the fee before checkout
✔ The fee doesn’t exceed your actual processing cost
✔ You’re not charging debit card transactions in states where it’s prohibited
Two common methods
Surcharging: Adding a percentage to card payments to cover processing costs.
Cash discounting: Offering a reduced price for cash, ACH, or checks.
Before adding anything to your invoices or POS system, talk with your processor. Many have built-in compliant programs so you don’t accidentally break state or federal rules.
The Trickiest Part: Reconciliation
Shops using systems like Shop Monkey, TechMetric, Stripe, Square, Venmo, Cash App, or other mobile processors face an extra challenge:
Your bank deposits don’t match your sales.
Why?
Because the fee is already removed before the money hits your account.
So if you don’t record fees separately, your books will show:
Inflated revenue
Understated expenses
Incorrect margins
Your margins are one of the most important indicators of business health. If the fees aren’t captured properly, the numbers you rely on for decisions—pricing, staffing, budgeting, parts ordering—will all be off.
The fix? Monthly reconciliation.
Each month, review your processor report for:
Gross sales
Refunds
Fees deducted
Net deposits
Then make sure those numbers tie perfectly to your QuickBooks income statement and the deposits in your bank account.
It’s tedious. It’s time-consuming. And it’s critical.
Why You Shouldn’t Be the One Doing This
Most shop owners don’t have extra hours lying around. Nights and weekends shouldn’t be spent trying to figure out why Square or Stripe doesn’t match QuickBooks.
Your time is better spent on things that actually make money:
Running jobs
Managing your team
Ordering parts
Serving customers
Growing the business
That’s where A&L Bookkeeping comes in.
We reconcile merchant accounts every month—accurately, consistently, and with an eye for catching problems before they cost you money. We separate the fees, clean up the deposits, and keep your margins honest so your financial reports tell the truth every time.
Protect Your Profit and Free Up Your Time
Convenience is great—but the wrong setup or sloppy reconciliation can cost you thousands a year.
When you understand your merchant fees, implement compliant policies, and have a bookkeeping team keeping everything clean in QuickBooks, you get two major wins:
Accurate financials and true margins
Confirmation that every processed dollar actually hit your bank
And yes—there’s often money hiding inside your merchant fees. We help you find it.
If you want a review of your payment setup or need help making sure QuickBooks matches your processor deposits, reach out to A&L Bookkeeping. We’ll help you see the full picture—and keep more profit in your pocket.