Card Payments for the Self-Employed - Fees and Dates
A business that takes card payments brings in a third party: whoever does the clearing. That changes three things at once. A fee appears, a gap opens between what the customer paid and what reaches the bank, and the payment is recorded through an instrument with details of its own.
What you actually need
Not a physical terminal, in most cases. Online clearing works through a payment link sent to the customer, a form on your site, or a recurring charge against details held by the provider. A physical terminal is mainly needed where there is a counter.
Either way the business opens an account with a clearing provider, is verified by them, and receives terms covering fees and settlement timing. The card details themselves are not kept by you, and should not be: that is the provider's job.
What makes up the fee
The line quoted in an offer is usually a percentage of the sale, but it is almost never alone.
- The percentage, and whether it varies by card type
- A minimum fee per transaction, which decides small sales
- Monthly terminal or service charges
- Settlement timing: how many days until the money lands
- What happens on a refund or a cancelled sale
- Separate fees on instalments or foreign currency
A business with a few large sales and one with many small sales will pay entirely different effective rates on the same turnover, because of the first two lines. Work it out on your real month, not on a sample transaction.
Which amount the documents show
This is the most common mistake: the receipt is issued for the full amount the customer was charged, not for what arrived in the bank after the fee.
A sale of ILS 1,000 on which ILS 978 was deposited is income of ILS 1,000 and an expense of ILS 22. Recording the income at the deposited figure understates turnover, hides the expense, and creates a gap against what the clearing provider reports.
The fee itself is an ordinary deductible expense, and an osek murshe also deducts the VAT on it as input VAT, against the tax invoice the provider issues.
What goes on the receipt
A card payment is recorded on a receipt with the card type and its last four digits. A full card number is never stored and never printed, on any document.
When payment arrives at the moment of sale, it is common to issue a single tax invoice receipt instead of two separate documents. That is the normal case with instant clearing.
When the income is recorded
By the date of the sale and the card charge, not the day the money reaches the account. Settlement days are a cash-flow matter and do not move the income into another period.
That matters most at the end of a reporting period: a sale made on the 30th whose money lands on the 10th of the next month belongs to the period it was made in. For most service providers the VAT charge also arises on receipt of payment, so both decisions land at the same point.
Instalments
A sale split into six payments is one sale. It is recorded in full on the date it took place, and the split is an arrangement between the customer and the card company. The income is not divided across six months, and neither is the VAT.
What does change is cash flow, and sometimes the fee: some providers charge extra on instalment sales.
Refunds and cancellations
A cancellation happens on two levels. With the clearing provider the card is refunded, and in the books you issue a credit note referencing the original document.
It is worth checking what the agreement says about the fee: with some providers the fee on the original sale is not returned, and sometimes a further fee applies to the refund itself. In a business with a high cancellation rate that line matters.
Getting paid without taking cards
Not every business needs this. A business paid by bank transfer that issues a document pays no clearing fee at all and depends on no settlement date. The cost is your time instead: chasing who has paid and who hasn't is work, and when payment is late the payment terms law enters the picture.
The decision usually follows the customer type. Private customers pay by card, business customers by transfer.
How this works in Slate
Slate does not clear payments from your customers. What it does is record the payment with its instrument, including the last four digits of the card, and record the clearing fee as an ordinary expense with its VAT. Anyone for whom in-system clearing is critical will find who does offer it in the systems comparison.
This is general information, not tax advice. For a specific case, consult an accountant or tax adviser.
Common questions
Which amount does the receipt show on a card sale?
The full amount the customer was charged, not what landed in the bank after the clearing fee. The fee is a cost of the business, not a discount given to the customer.
Is a clearing fee a deductible expense?
Yes, as an ordinary cost of earning income. An osek murshe also deducts the VAT on it as input VAT, against the tax invoice the clearing provider issues.
When is the income recorded, at the charge or at the deposit?
By the date of the sale and the card charge, not the day the money reaches the account. Settlement delay affects cash flow, not which period the income belongs to.
What goes on a receipt for a card payment?
The card type and its last four digits, alongside the amount and date. A full card number is never stored and never printed.
What about a sale split into instalments?
The whole sale is recorded on the date it took place, for the full amount. Splitting the charges is an arrangement with the card company and does not split the income across months.
Do I need a physical terminal to take cards?
No. You can charge through a payment link, a form on your site or an app. A physical terminal is mainly for selling over a counter.
What happens when a customer cancels?
You refund the card with the clearing provider and issue a credit note referencing the original document. Some providers do not return the fee on the cancelled sale, which is worth checking in the agreement.