This is specific to software companies who accept credit card as a form of payment for annual subscriptions, and does not pass along the cost to the customer.
Are Credit Card fees incurred Cost of Revenue or Operating Expenses
Answers
Credit card fees are operating expenses.
The reason I ask is because I was reading the 10-K of another software company - Datadog (DDOG), and their disclosure stated the following:
"Cost of revenue primarily consists of expenses related to providing our products to customers, including payments to our third-party cloud infrastructure providers for hosting our software, personnel-related expenses for operations and global support, including salaries, benefits, bonuses and stock-based compensation, payment processing fees, information technology, depreciation and amortization related to the amortization of acquired intangibles and internal-use software and other overhead costs such as allocated facilities."
They included in here "payment processing fees".
You will find the following URL interesting:
https://www.simpay.net/accounting-credit-card-processing-fees/
According to this site, there seems to be a new trend followed by those software companies that are not involved in the traditional retail e-commerce business and to whom, credit card payments are the standard for their financial transactions.
If you have to make a decision for your company, I would research whether there is an amendment under GAAP and check with your Auditors before you proceed.
Filed Under:
Accounting