# Processing fees

> Understand the platform and Stripe processing fees on online payments, choose who pays each one, and see exactly what your client is charged.

- URL: https://tillage.ai/docs/invoices/processing-fees
- Section: [Invoices and payments](https://tillage.ai/docs/invoices)

Two fees can apply when a client pays an invoice online: Tillage's platform fee and Stripe's processing fee. You decide who covers each one. This page explains both, how passing them to your client works, where card surcharges aren't allowed, and what the numbers look like on real invoices.

Payments you record yourself, such as checks or wires, carry no fees from Tillage.

## The two fees

| Fee | Rate | Notes |
|---|---|---|
| **Platform fee** | 1% of the invoice amount, capped at $50 | Same rate for card and bank payments. Tillage's only charge. |
| **Processing fee** | Card: 2.9% + $0.30. US ACH: 0.8%, capped at $5 | Charged by Stripe on the amount the client pays. |

The processing fee rates are Stripe's standard US prices, and they're what Tillage uses to estimate and pass through the fee. Stripe sets the actual fee on each charge; international cards, other countries and other bank methods can cost more or less. Check your Stripe Dashboard for your account's pricing.

## Choose who pays

1. Go to **Team Settings → Payments**.
2. In the **Fees & Invoicing** card, set each fee:
   - **Platform fee (1%)**: **Business absorbs** or **Client pays**
   - **Processing fee**: **Business absorbs** or **Client pays**
3. Use **Checkout preview** to enter an amount and see what your client would pay by credit card and by bank transfer.
4. Save your team settings.

Both default to **Business absorbs**. The setting applies to every online payment: invoices your client pays, auto-pay charges and payments you process on a saved card.

- **Business absorbs**: your client pays the invoice amount. The fee comes out of your payout.
- **Client pays**: the fee is added to your client's total at checkout. They see it as one **Processing fees** line, and it's mentioned on their payment confirmation email.

Fees passed to clients are cost recovery only. Tillage never adds a markup.

## How passing on the processing fee works

Stripe charges its fee on the total the client pays, including the fee itself. If Tillage simply added 2.9% + $0.30 to the invoice, Stripe would take a little more than that and you'd come up short. So Tillage grosses up the charge: it adds the amount that leaves you with the full invoice after Stripe's fee.

The order is:

1. Start with the invoice total.
2. Add the platform fee, if the client pays it.
3. Add the grossed-up processing fee, if the client pays it.

For bank payments, the processing fee is capped at $5, so once the cap applies the pass-through is a flat $5. The formulas are in [Formulas](https://tillage.ai/docs/reference/formulas#fee-gross-up).

## Worked examples

Card payments, calculated the way Tillage calculates them:

| Invoice | Platform fee | Processing fee | Client pays | You receive |
|---|---|---|---|---|
| $1,000.00 | Business absorbs | Business absorbs | $1,000.00 | $960.70 |
| $1,000.00 | Client pays | Business absorbs | $1,010.00 | $970.41 |
| $1,000.00 | Business absorbs | Client pays | $1,030.18 | $990.00 |
| $1,000.00 | Client pays | Client pays | $1,040.47 | $1,000.00 |
| $5,000.00 | Business absorbs | Business absorbs | $5,000.00 | $4,804.70 |
| $5,000.00 | Client pays | Client pays | $5,201.13 | $5,000.00 |
| $8,000.00 | Business absorbs | Business absorbs | $8,000.00 | $7,717.70 |

On the $8,000 invoice, 1% would be $80, so the $50 cap applies.

US bank (ACH) payments:

| Invoice | Platform fee | Processing fee | Client pays | You receive |
|---|---|---|---|---|
| $400.00 | Business absorbs | Client pays | $403.23 | $396.00 |
| $1,000.00 | Client pays | Client pays | $1,015.00 | $1,000.00 |
| $5,000.00 | Business absorbs | Business absorbs | $5,000.00 | $4,945.00 |
| $5,000.00 | Client pays | Client pays | $5,055.00 | $5,000.00 |

Here's the $1,000 card example with both fees passed on, step by step:

1. Platform fee: 1% × $1,000 = $10.00. Subtotal: $1,010.00.
2. Processing pass-through: ($1,010.00 × 0.029 + $0.30) ÷ (1 − 0.029) = $30.47.
3. Client pays: $1,010.00 + $30.47 = $1,040.47.
4. Stripe's fee on $1,040.47: $1,040.47 × 0.029 + $0.30 = $30.47.
5. You receive: $1,040.47 − $10.00 − $30.47 = $1,000.00.

## Where card surcharges aren't allowed

Passing the processing fee to clients is a card surcharge, and some places prohibit it.

- **Connecticut, Massachusetts and Puerto Rico**: if your business is located in one of these, **Client pays** is unavailable for the processing fee and it's always absorbed. Tillage enforces this when you save settings and again on every charge.
- **Location required**: **Client pays** for the processing fee stays disabled until your business location is set: a country, plus a state for US businesses. Set it in [Business and branding](https://tillage.ai/docs/account/business-and-branding).
- **Outside the United States**: rules vary and many countries prohibit surcharges. Tillage shows a warning when you choose **Client pays**; confirm it's permitted where you operate.

The platform fee applies equally to cards and bank transfers, so it isn't treated as a card surcharge. You can pass it to clients anywhere.

When either fee is set to **Client pays**, the settings card shows **Legal & compliance requirements**. Fees passed on must be limited to actual costs and disclosed at checkout, which Tillage does for you. You're responsible for the rules where you operate, so check with your legal advisor.

## Waive fees on one invoice

Per-invoice fee overrides are a team option that only Tillage can turn on. When they're on, the **Payment Preferences** card on each invoice, and the **Advanced** section of a billing schedule, shows:

- **Waive Platform Fee**: no Tillage platform fee on payments for this invoice.
- **Waive Processing Fee**: your business absorbs Stripe's fee for this invoice, even if your team setting is **Client pays**.

## Fees and refunds

When you refund a payment, the client gets back the amount you refund. Stripe doesn't return its processing fee, and Tillage's platform fee isn't returned either. See [Record payments and refunds](https://tillage.ai/docs/invoices/record-payments#refund-a-payment).

## Related

- [Pricing and fees](https://tillage.ai/docs/reference/pricing-and-fees)
- [Formulas](https://tillage.ai/docs/reference/formulas)
- [Set up payments](https://tillage.ai/docs/getting-started/set-up-payments)

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