Discount Fee Method: Daily vs. Monthly
Introduction
You have two options to choose from in deciding when you want the payment processer to deduct your credit card fees from your account: Monthly or daily discount.
Monthly discount: The processor deducts fees from the account in one lump sum once a month.
Daily discount: The processor deducts fees daily throughout the month as well as at the end of the month.
Both options at the end of the day will deduct the same amount of money (it is not an inherent real discount). What you are deciding is basically how you want to do your accounting.
The following will provide some considerations when choosing your discount fee method.
Monthly Billing
Monthly discount is the standard process of having fees debited from your account at the end of the month. This is considered "gross settlement" because the full amount of the batch is funded. No fees are removed from the daily deposit.
✅Deposits Do Match the Batch
Daily deposits match your daily batch amount exactly. This makes it much easier to identify potential issues with a deposit such as missing funds, chargebacks, batch errors, or funding delays.
❌Larger Debit
Fees are debited as a single, typically larger, lump sum amount. For customers offsetting their fees, they are collecting and holding that offset amount during the month. This is positive for cash flow, but some customers prefer not to hold these extra funds.
✅Cash Flow
Since you don't owe fees until the end of the month, you will have a more positive cash flow during the month.
✅Easier Reconciliation
Since deposits and batches match each day, only the month-end fee is required to be reconciled. This single fee will be the same amount listed on your monthly processing statement.
Daily Billing
Daily discount is an optional process of having fees debited before your daily deposit goes to your account. This is considered "net settlement" because you do not receive the full batch amount. Fees are removed daily before the deposit.
❌Deposits do NOT Match the Batch
Daily deposits do NOT match your daily batch. Issues such as missing funds, chargebacks, batch errors, or funding delays aren't as noticeable.
Note: Merchants using a pass-thru+ model will have to use their online reporting to match their deposits and batches or wait for the monthly statements to audit their batches and fees.
✅No Large Debit
Since fees are paid before your deposit, you don't need to make a payment at the end of the month. Some customers prefer this when offsetting payment costs, so they are not holding the extra funds.
❌Difficult Reconciliation
Since every deposit has fees removed before it hits your bank account your batch will never match your deposit. This makes it difficult to perform bank reconciliation.
Summary
Monthly Billing |
Daily Billing |
| ✅Deposits DO Match the Batch | ❌Deposits do NOT Match the Batch |
| ❌Larger Debit | ✅No Large Debit |
| ✅Easier Reconciliation | ❌Difficult Reconciliation |
| ✅Cash Flow |
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