Cha-ching: Free credit card payment processing tips

Credit card processingEveryone wants to get their credit when credit is due, especially in a slow economy. According to Alex Macdonald, Esq., coauthor of the Ohio State Bar Association's law office resource, OfficeKeeper, you need to be aware of the following information so that your credit card payments are processed correctly and efficiently.

A lawyer may accept credit card payments from clients for:

  • Earned legal fees;
  • Reimbursement of legal expenses;
  • Advances on unearned legal fees; and
  • Future expenses.
Ideally, a lawyer choosing to accept credit card payments should establish two merchant accounts for credit card payments:

  • One to accept payments of earned legal fees and reimbursement of legal expenses to a lawyer’s business/general account; and
  • Another to accept payments of advances on unearned legal fees and future expenses to a client trust account (IOLTA) to comply with Rule 1.15(c).
Alternatively, when it is not practicable or feasible for a lawyer to set up two merchant accounts, all credit card payments should go into one merchant account set up as a client trust account (IOLTA).

When accepting credit card payments in this manner, the attorney must promptly transfer all earned fees and reimbursements of legal expenses from the IOLTA merchant account to the lawyer’s general account to accommodate Rule 1.15(a). See The Ohio Supreme Court Board of Commissioners on Grievances and Discipline Opinion 2007-3.

A merchant account with the bank will require payment of a number of brokerage and credit card service charges, including a discount rate. The discount rate represents the percentage of the credit card payment that the bank will keep. Discount rates vary, but are generally in the range of two to five percent of the credit card payment. Other fees may include a monthly merchant account fee and a fee for leasing equipment necessary to authorize the credit card payment and process the payment into the bank account.

A merchant account agreement with the bank usually prohibits charging the holder of the credit card for any associated merchant account fees or discount rates. Under this agreement, a client payment by credit card should be recorded to the client billing system at the full amount of the credit card payment, and the discount rate bank charge should be recorded as a firm expense.

When the merchant account is processed through the lawyer’s IOLTA or clienttrust account, it is permissible to commingle the lawyer’s own funds with the client funds in an IOLTA to pay brokerage and credit card service charges. Such charges are the responsibility of the lawyer and may not be deducted from the interest earned on a client trust account.  Accurate records must be kept regarding which part of the funds within the IOLTA are the lawyer’s. See The Ohio Supreme Court Board of Commissioners on Grievances and Discipline Opinion 2007-3, citing Ohio Rules of Professional Conduct, Comment [2] to Rule 1.15.

The OSBA has a member benefit program called LawPay, which offers OSBA members discounted rates on all your credit card processing needs. The ability to accept credit cards attracts clients, improves cash flow and reduces collections.



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