Withholding Credit Card Tips for CC Processing Fees

Overview

When the 'Withhold % of POS Credit Card Tips' setting is configured, a percentage of POS card tips is withheld from tips owed to contributing and receiving employees to cover credit card processing fees. The 'Withhold % of POS Credit Card Tips' setting is set separately on each tip automation rule for a location.

The total amount withheld is viewable in the Contributors portion of tip automation distributions in the Withheld CC % column. The Withheld CC % column is only displayed on distributions where the 'Withhold % of POS Credit Card Tips' setting is configured. 

Calculations

The total withheld amount is split between the contributing employee and receiving employees based on the percentage of total tips out contributed by the contributing employee. Each employee's portion of the withheld amount is then subtracted from their tips owed. 

The contributing employee's portion is calculated by first determining what percentage of the withholding they are responsible for. The contributing employee's portion percentage is calculated as (Total Tips - Tip Out) / Total Tips. This is then applied to the total Withheld CC% amount to get the amount withheld from the contributor. 

The receiving employees' portion is calculated as the total Withheld CC% amount - contributing employee's portion. 

Credit Card Tip Withholding in the POS

Some POS systems already calculate and withhold the credit card processing fee percentage from tips before data is polled into R365.

The calculations for the withheld CC% amount within Tip Automation assume that the credit card processing fee percentage has not already been withheld. It is recommended to confirm settings in the POS for the location prior to enabling the 'Withhold % of POS Credit Card Tips' setting in Tip Automation. 

Journal Entries

If the 'Pay Tips With Payroll' setting is enabled for the location, 'POS Cash' and 'POS Card' tips in POS data are included on DSS Sales JEs and associated with the configured Tips Payable Account. 

Since the 'Withhold % of POS Credit Card Tips' setting reduces the amount of tips paid to employees, it is recommended to create a journal entry to reallocate the total Withheld CC% amount from the tips payable account to an appropriate liability account. 

Setup

Follow these steps to configure the 'Withhold % of POS Credit Card Tips' setting within a tip automation rule: 

1	Open the desired Tip Automation rule.
2	Enable the 'Withhold % of POS Credit Card Tips' toggle.
3	Enter the percentage of POS card tips that are withheld to cover credit card processing fees.
4	Click Save.