How to Accept Credit Cards from Clients

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In this post, we will compare four credit-card processors designed for lawyers: LawCharge, PayPros Legal, LawPay, and Lex/Actum. In addition, we will look at three general-purpose credit-card processors: Stripe, Authorize.Net, PayPal, Square, and QuickBooks. All these services let you take credit card payments via the web, and some will let you hook up a physical terminal, as well.

Index

Ethical Issues

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LawPay

Credit card payments and trust accounting can be a thorny ethical issues. While moonlighting at Attorney at Work, Megan Zavieh wrote that lawyers should get over the fear of taking credit cards because (a) credit cards are how most people pay for things, and (b) there is no prohibition on taking credit cards. Familiarize yourself with the rules on advance fees and credit-card chargebacks in your jurisdiction. Finally, consider using a lawyer-specific credit card processor that avoids taking fees from trust accounts. It can also be helpful to put language in your retainer requiring your client to dispute payment with you, first, instead of going straight to the credit card company.

Understanding Credit-Card Processing

Credit card processing is a complicated mess of components and fees. No matter who you choose, it is hard not to feel as if you are getting nickeled-and-dimed.

That said, credit card processing boils down to two main components, each of which involve a monthly fee that applies to every transaction:

  1. The payment gateway is what you or your clients use to enter credit card information. This can be a physical card reader, a form on your website, or a virtual terminal — basically a credit card entry form that you can use to enter a client’s credit-card information yourself.
  2. The merchant account receives the money and holds it for a bit before the transferring it to your firm’s bank account.

Although there are a lot of different fee possibilities, it should not be impossible for you to determine how much money you will spend. For any service you choose to use, expect monthly fees anywhere from $5–100. Per-transaction fees generally include a flat fee plus a percentage of the amount charged. This can vary from 10-75¢ for the flat fee, and 1.95-3.5% for the percentage. (The per-transaction charges get smaller if you do enough business by credit card. If you expect a lot of payments, investigate the options.)

You usually have to pay for extra services, like recurring billing, or integration with external software like Quickbooks. Unlike monthly fees and processing costs, this information may not be easily available. You may have to talk to a sales representative to get more information. Additionally, these extra costs may vary widely based on how much business you are planning on doing, and how much the processor wants your business.

Lex/Actum

lexactum logo How to Accept Credit Cards from Clients

Lex/Actum’s pricing tier was not readily available on its site, but it took only a quick email to get detailed info about its plans. Lex/Actum’s pricing structure forgoes certain types of transaction costs in favor of higher monthly costs.

With Lex/Actum, attorneys that process less than $10,000/month of payments have two choices:

$19/month

  • 25¢/transaction fee
  • No separation of trust, and operating accounts.
  • Unlimited processing

$39/month

  • 25¢/transaction fee
  • Separation of trust, and operating accounts.
  • Unlimited processing
  • Invoicing software

Attorneys that process more than $10,000/month also have two options:

$59/month

  • 10¢/transaction fee
  • No separation of trust, and operating accounts.
  • Unlimited processing
  • Invoicing software

$99/month

  • 10¢/transaction fee
  • Separation of trust, and operating accounts.
  • Unlimited processing
  • Invoicing software

All of the options come with a dedicated payment page for your firm (example here).

Much like LawPay, the lower tiers of Lex/Actum do not include the separation of trust and operating accounts, making those plans a poor choice if you regularly deal with advance fees.

Although Lex/Actum does not charge percentage fees, you can not get around the interchange costs charged by Visa and Mastercard, which are 1-2% of a transaction. Every merchant pays those fees, period. Card processors typically pass this cost along to you and then add a bit on top, which is why you see the 1.95-3.5% fees with other providers. Lex/Actum gets rid of additional fees in its pricing scheme (though you’ll still pay them to Visa/Mastercard no matter what) in favor of the higher monthly costs.

Lex/Actum is a good choice for firms that can predict how many transactions they process each month, and would rather have the certainty of steady monthly costs.

LawPay

lawpay logo shadow How to Accept Credit Cards from ClientsIf you feel most comfortable with a high-profile endorsement, LawPay is for you. LawPay boasts endorsements from the ABA and 39 state bars. That does not mean you are free of worrying about ethical issues, but it does indicate acceptance among lawyers, for whatever that is worth.

LawPay offers three separate tiers of service depending on your firm’s credit card processing needs:

Small Firm Plan

  • 3.5% transaction fee
  • $5/month subscription fee

LawPay Plan

  • 1.95% + 20¢ per transaction fee
  • $15/month subscription fee

LawPay Trust Program

  • 1.95% + 20¢ per transaction fee
  • $20/month for deposit to multiple accounts.

None of the plans come with setup fees, though those may exist if you have special processing needs. Both the Small Firm Plan and Lawpay Plan are attractive to small firms at first blush, as the low monthly subscription fee keeps your overhead low, but those two plans will not provide you with the seamless trust account options that the Trust Program offers. If you choose the Trust Program, you get a plan that separates your funds immediately into trust and operating accounts, with processing fees being deducted from your operating account. There is no commingling and no need to move money from one account to the other depending on the kind of payment.

LawPay also integrates with Clio and Rocket Matter, and offers a mobile platform that allows you to charge payments via iPhone, iPad, or Android.

The lower-cost plans are good choices for attorneys who process a few, usually-small transactions each month, but the real accolades for LawPay are based on the features of the highest-priced plan. That said, the $20/month fee and 1.95% + 20¢ transaction fee are completely in line with other plans we looked at. If integration features are appealing, and you frequently need to deal with trust accounting issues, LawPay may be your first choice.

PayPros Legal

paypros legal logo How to Accept Credit Cards from ClientsPayPros Legal is a lawyer-specific branch of a long-time credit card processor, PayPros. Although it is geared towards general credit card processing questions, PayPros seems to understand the ethical obligations lawyers face, and can set up separate operating and trust accounts for you. Additionally, PayPros Legal ensures that fees are deducted only from the operating account. PayPros also partners with MyCase and Lexis, among others. Along with the standard virtual terminal, PayPro Legal provides eBilling and a mobile payment platform. However, much of the business model is built around encouraging a physical card swipe.

PayPros Legal’s pricing structure is the functional opposite of Lex/Actum. PayPros does not charge any monthly fees, nor does it require a contract. Instead, you will pay anywhere from 1.69% to 2.99% per transaction depending on the type of card you accept. However, that low-end rate of 1.69% is only available if you swipe rather than key the card, which means you have to buy a swipe terminal from PayPros Legal ($60), or pick one up elsewhere. That may be an unattractive option for an attorney who is looking to handle payments with minimal fuss. If you (or your client, possibly) key in a card, you will pay 2.75% per transaction. While the transaction cost is high, the lack of monthly fees might make this a great option for an attorney who only needs to take credit card payments sparingly.

LawCharge

logo 1 How to Accept Credit Cards from Clients

LawCharge provides the key feature — ability to deposit to multiple accounts, and thus avoid commingling — that the other legal-specific providers do. However, the website comes with a relatively loose explanation of how fees will be charged.

Your setup fee will be $100-$200, but you can request that the fee be waived if you are moving from another processor. Your monthly charges can range anywhere from $0 to $20. Per transaction fees can span anywhere from 19¢ to 75¢ per transaction, and your percentage per transaction can only be obtained by calling for an additional quote, and that quote will be determined by the type of processing you need. However, once you are all set up, LawCharge will let you deposit fees to both your trust, and operating accounts, with fees debited from the operating account at the the end of the month.

LawCharge also offers what it calls a “private payment portal,” where your client would go to LawCharge’s website, and pay via that site. The client then pays the transaction fees as a convenience fee, essentially, and you never have access to their credit card information.

LawCharge integrates with Clio, and offers a mobile app as well. It is entirely possible that LawCharge can live up to its claim that it is the most cost-effective option for attorneys, but unfortunately you will not find that out unless you invest some time discussing pricing scenarios with them directly.

With so many lawyer-specific options, it is tempting to avoid the general service credit card processors entirely. Regardless, these services may be valuable for lawyers who charge flat fees or rarely deal with trust funds.

Authorize.Net

authorizenet How to Accept Credit Cards from Clients

Three years ago, we were impressed with how responsive they were to pricing inquiries, and how easy it was to set up their services. They offer the obligatory virtual terminal, and a free mobile app. Even though they have shifted the pricing structure on their website, it remains roughly the same as when we looked three years ago, which is nice to see.

Authorize.Net does not offer different tiers, but instead charges extra for some add-ons. Here are the fees you have to pay no matter what you are setting up:

  • Setup fee: $99.00
  • Monthly gateway fee: $20.00
  • Transaction fee: 10¢

Setting up recurring billing will cost you an additional $20/month, and fraud protection runs $9.95/month.

It is easy to connect Authorize.Net to external software like Freshbooks and Xero, and Authorize.Net makes it seamless for attorneys to generate invoices, and clients to pay those invoices. The only downside to Authorize.Net for lawyers is that it is not set up for trust payments, and given that a lot of lawyer-specific services now exist, that might be a dealbreaker, as you will either need to engage in some very complicated maneuvering to deal with advance fees, or forego them entirely.

Stripe

Full disclosure: Lawyerist is currently using Stripe.

stripe logo How to Accept Credit Cards from ClientsThough Stripe will not help you address the trust account issue, if you do not frequently find yourself processing advance fees, Stripe is probably the credit card processor. Your only fees are a 2.9% + 30¢ transaction fee. There are no monthly fees, no setup fees, and no small-print-at-the-bottom-of-the-page fees. If you process an upwards of $80,000/month, shoot them an email for a custom pricing scheme.

Stripe provides a payment form that works across smartphones, tablets, and desktops without any additional setup on your end. They will also transfer funds to your existing bank account for free, but they will charge you 25¢ per transfer if you want to send it to a third-party account. If you enjoy having a wide variety of features, Stripe has a large number of third-party add-ons that can handle tasks such recurring billing, integrating with Quickbooks, or building your own custom payment platform. The latter may prove entirely unnecessary, but sometimes it is nice to know you have options. All the options.

PayPal

new paypal logo 150x150 How to Accept Credit Cards from ClientsThree years ago, PayPal was clunky to navigate. That has changed somewhat as PayPal has moved towards trying to offer a Stripe-like out-of-the-virtual-box experience. Paypal will charge you the same amount as Stripe — 2.9% + 30¢ per transaction — for the basic PayPal experience that many of your clients may already be familiar with. However, if you want to keep your clients on your site while they pay, rather than kicking them over to PayPal, you will need to go with PayPal Payments Pro, which will run you $30/month. This will then lead you down the most complicated labyrinth of possible fees imaginable.

Several years ago, PayPal was an attractive option despite its misgivings due to its familiarity, and integration with services such as Quickbooks — albeit at a steep cost. Now, the PayPal interface feels dated and it is still difficult to navigate. It is also unseemly to kick your client over to the same type of website he or she would use if they won an eBay auction for a vintage Metallica t-shirt. If you need to accept credit cards more than a few times a year, there is no reason to go with PayPal when Stripe exists.

Square

Square logo 300x81 How to Accept Credit Cards from Clients

Square has always focused on point-of-sale credit card swiping, and is an excellent choice for small merchants who sell products on the go or at multiple locations. They will even send you a free card reader just for signing up. Swiped cards cost you 2.75% in transaction fees, which is well within the average range of other payment processors.

You can also send your clients a Square Invoice via email, which they can pay using their credit or debit card. However, Square invoices come with some significant limitations. You cannot apply discounts or send the invoice to more than one email address. Additionally, the invoices look very much like an invoice for a sale of an item, not a charge for services. That said, Square provides you with a dashboard to track your invoices, and sends payments to your bank within one to two business days.

If you choose to accept a credit card without using the free Square reader, you will be charged 3.15% + 15¢ a transaction, which is definitely in the high range. It is difficult to see why Square would be a useful option for lawyers given the number of competitors that offer more versatility, lower fees, or both.

Intuit QuickBooks Payments

quickbooks new logo 300x170 How to Accept Credit Cards from Clients

Many lawyers are likely using Quickbooks to track accounts payables and receivables and other profit/loss information. If that is the case, it is natural to look at QuickBooks Payments as a credit card processor. For an existing QuickBooks user, Intuit’s card processing service has no set-up fee and no contract, which is attractive to the attorney who only needs to run a few credit card payments per year.

QuickBooks offers two processing options for current QuickBooks users. For $19.95 a month, your transaction cost will be 1.75% + 25¢ for swiped cards, and 3.15% + 25¢ for cards that are keyed in. At $0 a month, a transaction will cost you 2.4% + 25¢ for swiped cards, and 3.4% + 25¢ for keyed cards. QuickBooks also allows you to send invoices, and updates your books when the invoice is paid. Additionally, QuickBooks will auto-deposit your funds. For current customers, these extras make Quickbooks an attractive option to Stripe, even though the swiped card rates are higher.

If you are not already a QuickBooks user, the transaction costs will remain the same, but you will have to use their GoPayment mobile app to accept payment. If you want to accept payments via the web, you or your client have to go through QuickBooks’ unattractive and cumbersome Online Service Center. Like PayPal, your clients will also have to leave your site to make a payment. This makes Stripe a superior contender to Quickbooks if you are not a customer.

Closing the Sale with a Credit Card

Three years ago, there were virtually no lawyer-specific options, leaving us to recommend the best general card processor. In that arena, Stripe is the current leader, simply because it has taken the guesswork out of running a credit card processor. However, for attorneys that need to routinely process advance fees, it is difficult to go with a general services provider.

In that event, LawPay’s mountain of bar endorsements speaks to the fact that it is well-respected. Keep in mind, however, if you go with LawPay, you need pay for their Trust Program to get the benefit of the trust account separation. If you are using any of the other payment services, let us know how those are working out for you.

This post was originally published on March 17, 2011. It was rewritten and updated with several new processors on July 24, 2014.

Featured image: “Businessman in business suit pay by credit card.”

Practice Management

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  • http://www.attorneysync.com Gyi Tsakalakis

    +1 Authorize.net

  • Joy Wilder

    A lot of my clients like Authorize.net for their credit card needs. Nice article!

    Joy Wilder

  • http://bunkerlawgroup.com/the-las-vegas-nevada-small-business-blog/ Ben Bunker

    Anyone have input on LawCharge? I’ve been using them and so far have been pleased. I was wondering if there are any other users around who may have comments.

  • http://Joseduddy.com Joseduddy

    I have a free square account. There is a per transaction fee but reasonable. Works on iPhone/iPad/Andriod and more. Access all transaction from a secure website. One down fall is. Three day transfer to your bank. Other than that it is fantastic.

    • http://lawyerist.com/author/samglover/ Sam Glover

      Square and PayPal are about the same as far as fees, convenience, and customer service go (although Square has the nifty card reader). In other words, expensive, convenient enough, and questionable customer service. Once you are accepting a reasonable amount of fees via credit card, you are much better off with a real merchant account.

  • http://virtualpaymentsystem.com Mike Seidle

    Sam, you have the pricing for VPS right.

  • http://lawyerist.com/author/karinconroy/ Karin Conroy

    I’m a big fan of the PayPal version that links in with my Harvest account. I love only paying $.50 per transaction with no setup fee so am willing to deal with the PayPal interface. However (as you mentioned) there is the huge caveat that it really isn’t a credit card payment option since it has to link to a bank account, so it’s more of an online payment method.

  • http://lawyerist.com/author/kevinhouchin/ Kevin Houchin

    Authorize.net is critical to my flat-fee billing model. I’m sure others can do the same thing, but being able to set up automatic-recurring transactions is key. I also like the reporting I receive via email as transactions process and clear. The online terminal works great and I can give my book-keeper limited access so that she can pull the information she needs.

    I’ve done some checking around and know for a fact (at least a fact in my anecdotal study) that being able to accept credit/debit card payment VASTLY lowers both the outstanding receivables percentage and the time between billing and payment. I don’t have to hope for checks in the mailbox anymore because about 95% of my revenues are paid via credit/debit card. The processing fees are worth every penny.

  • http://www.attorneysync.com Jeff Berman

    You can sign up for a merchant account through some of the larger banks (for instance, we use Chase for business checking) and use authorize.net as the payment gateway.

    Often if you have a business checking account, you can get even better rates on your merchant services. Additionally,the transactions will process more quickly and funds will post to your account sooner when you have a checking account with the same bank.

  • http://www.DepartmentQ.com/ Austin

    Thanks for your review. It was very helpful. I am a Freshbooks user too and need to decide who to use for auto bill transactions.

    • http://lawyerist.com/author/samglover/ Sam Glover

      I use Authorize.Net for my merchant account, but if you connect it to Freshbooks, you don’t need to sign up for Automated Recurring Billing with Authorize.Net. Freshbooks will remember your clients’ credit card information and handle the recurring billing for you, and it works out to be cheaper than ARB with Authorize.Net.

  • Anthony Vrsecky

    Your evaluation of VPS mentions the problem of advance fees into trust. I don’t understand the problem to which you are referring. Please enlighten me. We have used a number gateways in the past and have recently switched to CC processing by our bank with assurances of the following: Any processing costs for funds deposited into trust are debited from the general operationg account. Likewise, any trust deposit charge-backs which we’ve never had one in over ten years of accepting CC’s, are debited from the general account. All CC deposits used to go into trust to avoid possible errors such as depositing costs into the general account. Now we are depositing earned fees directly into general and costs into trust which saves a lot of time needed to transfer fees between accounts.

    • http://lawyerist.com/author/samglover/ Sam Glover

      The problem is as you noted — transaction fees must either come from another account or, as VPS handles it, be paid separately.

  • Jim Lee

    I think it is much cheaper to open a gateway with Authorize.net partners. Here is the cost breakdown for the services I signed up at unitedbankservice.com:

    Setup fee: $0
    Monthly fee: $15 ($5 gateway; $10 merchant account)
    Per-transaction fees: $0.20 + 2.1%
    Auth ARB Recurring billing: $10/month

    Quite similar to Paypal, I also use the Authorizenet Simple Checkout, which allows me to easily create a Buy Now button instantly, by generating a small script for facebook or invoice.

  • Patricia

    Thanks for writing this post! Very useful and I learned a lot.

  • Dale N

    Jim lee you got that right I signed up through an authnet reseller called merchantinc and got the authorize.net payment gateway for 6.95 and the merchant account for $1 no set up fees or contracts and 1.99%

  • http://www.apollowati.com/ eCommerce pro

    Actually Paypal and PP Pro are about a light year (literally) ahead of any merchant account on the market when it comes to integration, tech, back-end design, and getting your cash faster. Its like an iPhone or Italian furniture, to be honest.
    Its like comparing Apple software to Microsoft ; sure MS is the most popular OS, but that’s how it usually is, isn’t it? _ more people can afford a GM SUV vs a Porsche Cayenne. This is not to say that GM cars won’t get you from A-to-B, or that Auth-NET won’t process your charges …!

    The real question is: what’s your Budget?

  • Jimmy The Gent

    I agree 100% with eCommerce pro, PayPal is light-years better than authorize.net. I’m an app developer and publisher and we’ve had many issues with our client apps that had authorize.net as the payment interface. We’ve had ZERO issues with PayPal. We now use PayPal Here to make POS payments from clients when we close sales. No brainer.

  • fuzz

    Would love to see an update on this, especially since there has been some activity in this space. Does Stripe live up to its hype? Apparently, they have a customer service via email only policy, which I’m skeptical of.

    • http://samglover.net/ Sam Glover

      We actually use Stripe for Sites, and it’s great. But Stripe is more of a payment backend then PayPal or Authorize.net. It doesn’t offer a virtual terminal for you to directly enter credit card numbers, for example. It’s awesome if you’re using Freshbooks or Xero to let people pay their invoices, but it’s not great if you’re hoping to have someone hand you a credit card while sitting in your office.

  • Kimberly Rotter

    Still using Authorize.net? They seem to have made some strides in offerings and pricing over the last 2-3 yrs.

    • http://samglover.net/ Sam Glover

      We aren’t. We’re using Stripe, now. I’ve been meaning to update this post, too.

      • Kimberly Rotter

        I’ll keep my eye out for updates. Thanks.

  • Batman5678

    Why no mention of the 800 lb gorilla, Square?

    • http://samglover.net/ Sam Glover

      Square is swipe-only. If you are taking credit card payments from clients in your office, it’s a good option. But if you want clients to be able to pay your invoices from their computer (or phone), it won’t work.

      • John Radshaw
        • http://samglover.net/ Sam Glover

          Yes, but it’s still for point of sale transactions.

          I don’t want to discourage anyone from using Square. Everyone should probably have an account, just in case you need to take a payment from someone sitting across from you. But it’s no good for trust funds in most jurisdictions, and you can’t use it for things like invoices. Stripe is better for that, or Lex/Actum or LawPay if you need a trust account–compatible option.

          • http://www.leichtlawoffice.com Colin

            I disagree that Square is not available for invoices. I use it for invoices and have had no problem. I only use it for actual payments to the bill for services rendered, or for flat-fee advances, and not for retainer balances, as a policy.

            My understanding is that very few credit card processors (Only LawPay, to my knowledge) will work with retainers because of the likelihood of chargebacks taking OPP from the account = violation, regardless of how it balances out later.

            Quite frankly most people have paid with cash/check at my office, but it’s good to have the credit option there for when they haven’t paid their bills.

            • http://samglover.net/ Sam Glover

              How do you use Square to let people pay invoices? There’s nothing on its website to indicate that is possible, and none of the timekeeping services I’ve seen offer Square integration. Unless someone is paying you over the phone or in your office, I don’t know how this would work.

              As for who will work with retainers, Lisa listed four companies that specifically offer that service to attorneys.

              • http://www.leichtlawoffice.com Colin

                Ah, I see what you mean now. No, clients can’t use it themselves to pay. Usually I just take the number over the phone. What I like about Square is that its a low percentage amount. I suppose if I had a number of large accounts I would probably switch over to LawPay (run by a lawyer and has a system in place to avoid the retainer chargeback problem), but for my small operation, Square is great to get past due accounts to make a payment while I’m on the phone with them.

                • http://samglover.net/ Sam Glover

                  It’s even easier if they can just click Pay Now on your invoice, which is why you might want to use something like Stripe or PayPal.

                  • http://www.leichtlawoffice.com Colin

                    That’s true, we now live in a world where giving people a digital button to push is irresistible. I’ll have to look further into Stripe to see how it all works.

                    The problem with PayPal is that I constantly get email from Paypal telling me I have a problem with my account…when I do not have a Paypal account. It’d be hard to tell which email is from the real Paypal.

      • Chad M.

        Square just rolled out an invoicing option. You can send them direct to email now. Might be a bit duplicative but if a client requests a cc payment, you can just send over a Square invoice in addition to the usual. I’ve used it before, worked like a charm.

  • Bernard Jones

    Square is a rip off. Why no mention of the fact that you cannot talk with a human at Square if you have a customer service issue? Why no mention of the numerous BBB complaints filed against Square?