Fees in Embedded Payments
When you send invoices through our platform and allow your customers to pay by
credit card, processing fees are calculated using a gross-up model. This ensures you
receive the full invoice amount, even after card network and processor fees are
deducted.
This article explains how the calculation works and how to communicate these fees
clearly to your customers.
Why Credit Card Payments Are Grossed Up
Credit card processors charge fees as a percentage of the total amount processed,
not the invoice subtotal. When processing fees are passed through to the payer,
the payment is grossed up so that:
The processor deducts their fee
You still receive the full invoice amount
This is the standard approach used across embedded payments platforms (Stripe,
Adyen, Braintree, JustiFi, etc) and card processors. It protects your invoice total and
ensures accurate reconciliation.
Example: American Express Payment
In the example below, a customer chooses to pay an invoice using American
Express.
Invoice details:
Invoice amount: $130,767.03
Payment method: American Express
At checkout:
Total amount processed: $135,229.92
Processing fee: $4,462.89
Amount you receive: $130,767.03
The processing fee is calculated on the total processed amount, not the invoice subtotal. This ensures the invoice is paid in full.
Why the Invoice Amount Does Not Change
The invoice total always remains the same. The additional amount shown at checkout reflects the cost of choosing a credit card payment method.
If the processing fee were deducted from the invoice amount instead, the invoice would be underpaid after fees are applied. The gross-up model prevents this and keeps your invoicing accurate.
How to Explain Credit Card Fees to Your Customers
When discussing credit card fees with your customers, it’s important not to describe them as a flat percentage you are charging. Instead, position them correctly as payment processing costs determined by the card network and payment processor.
Recommended Language
You can use language like:
“Credit card payments include processing costs set by the card networks and banks. When paying by card, those costs are added at checkout so the invoice can be paid in full.”
Or:
“The total at checkout reflects the processing costs required to complete a credit card transaction. These fees are determined by the payment method and are not retained as additional revenue.”
Summary
Credit card payments use a gross-up model
You always receive the full invoice amount
Processing fees are set by card networks and processors which is standard
Fees are added at checkout based on the selected payment method