The cost that is taken before the money arrives.

Card processing is usually a restaurant's third or fourth largest cost after food, labor and rent — and the only one that never appears as a bill. It is deducted from the deposit, which makes it the easiest expense in the building to never record at all. Here is where it belongs, what else is hiding inside the same deposit, and the one monthly number that catches a rate moving against you.

LedgerInbox · September 2026 · corrections@ledgerinbox.com

Two deposit models, two entries

Before anything, establish which one the client is on — the answer changes the bookkeeping entirely, and it is on the merchant statement, not in the POS.

On net daily, the deposit is a net figure and the gross is only knowable from the POS and the statement. Recording the deposit as revenue applies a silent ~2.6% haircut to every card sale for as long as the client is open.

The entry

Card sales were already recognised on the service date, sitting in the card settlements clearing account — 1012 in the chart. The deposit's job is to clear it, and the difference between what was earned and what arrived is where the fee lives.

The clearing account is what makes this checkable. If it does not return to roughly the weekend-in-transit figure, something in the chain is unrecorded — and you find out at the close instead of at the audit.

Four things inside the deposit that are not processing fees

This is where most restaurant files go wrong: everything Toast deducts gets swept into one expense account, and three unrelated costs disappear into a fee line nobody can interrogate.

You also pay the fee on the tips

Processing is charged on the full authorised amount, and that includes the tip. A $100 check with a $20 tip is a $120 authorisation, and the ~2.6% is levied on $120. The restaurant pays roughly 52 cents to move $20 that belongs to a server. It is a real cost of the tipping mechanism, it is inside 7400 already, and it is worth naming when a client asks why fees look high relative to sales — because fees are a percentage of a number bigger than sales.

The tip itself is a liability, not revenue, and follows its own path — tip liability journal entries and the rollforward.

The one number to track: effective rate

Total processing fees divided by gross card volume, monthly. Not the rate on the contract — the rate actually paid. One number, one minute, and it is the only thing that reliably catches creep.

Why the rate moves with no contract change

• Card mix. More rewards, corporate and Amex cards carry higher interchange. A neighbourhood shifting upmarket raises the rate on its own.
• Channel mix. Phone and online orders are card-not-present and cost more than a dipped chip. A growing delivery or pickup channel moves the blended rate.
• Downgrades. Transactions that miss qualification — settled late, missing data — get repriced at a worse tier. A batch that stops closing nightly costs real money.
• Assessment changes. The networks adjust in April and October. Small, but it is a step change, not noise, so it shows clearly in a monthly series.
• Chargebacks. Each carries a fee on top of the reversed sale.

Knowing which of these it is decides the action: a mix shift is nothing to do, a downgrade pattern is an operations fix, and a markup change is a conversation with the processor.

The monthly proof

Three comparisons, all at step 8 of the close:

Two of those three come from the merchant statement, which is the document most likely to go unopened all year. It is also the only place the fee is itemised — the bank feed shows a net number and the POS shows a gross one, and neither can tell you what was taken.