Reconciling Pin Payments in Xero Using a Clearing Account

When customers pay by card through HirePOS and Pin Payments, the amount collected from customers may be different from the amount later deposited into your business bank account.

This is normally because Pin Payments deducts processing fees and may combine multiple payments, refunds and adjustments into a single settlement.

One way to manage Pin Payments reconciliation in Xero is to use a Pin Payments clearing account. Read more about Xero Clearing Accounts here: https://docs.hirepos.com/en/articles/2734465

This is a similar flow as seen with EFTPOS machines and clearing accounts, more information available here: https://docs.hirepos.com/en/articles/2312833

This allows the full customer payment recorded by HirePOS to be exported to Xero while the later Pin Payments settlement and processing fees are accounted for separately.

This guide provides general information and describes one possible workflow only. It is not accounting, bookkeeping, tax or financial advice.

Discuss the appropriate accounts, tax treatment and reconciliation process with your accountant or bookkeeper. For detailed instructions on using Xero, refer to Xero Help or Xero Support.

The general payment and reconciliation flow is:

1. A customer pays by card through HirePOS and Pin Payments.

2. Pin Payments processes the full customer payment.

3. HirePOS creates a payment record for the full amount paid.

4. The HirePOS invoice is exported to Xero, if it does not already exist there.

5. The HirePOS payment is exported to Xero using the Payments exporter and allocated to a Pin Payments clearing account.

6. Pin Payments later deposits a settlement into your business bank account, generally after deducting processing fees.

7. The settlement is reconciled against the Pin Payments clearing account in Xero.

8. Pin Payments processing fees and other adjustments are accounted for as appropriate.

Xero documents a similar clearing-account approach for reconciling online sales where payment processors deduct fees before depositing funds.

Xero Help: Reconcile payments received from online sales

For a simple example:

• Customer payment: $100

• Pin Payments processing fees: $2

• Pin Payments settlement to your bank: $98

When the HirePOS payment is exported to Xero, the full $100 payment is allocated to the Pin Payments clearing account.

The clearing account therefore represents $100 received through Pin Payments.

When Pin Payments later deposits $98 into your business bank account, that $98 settlement is reconciled against the clearing account.

The remaining $2 represents the difference between the gross customer payment and the net settlement.

Once the $2 processing fee is also accounted for, the complete $100 payment has been accounted for:

$100 customer payment = $98 bank settlement + $2 processing fee

Real Pin Payments settlements may contain multiple customer payments, refunds, fees and other adjustments, so always refer to the Pin Payments settlement information when reconciling.

Create an appropriate account in your Xero Chart of Accounts to use as the Pin Payments clearing account.

For example:

Pin Payments Clearing Account

A current asset or other appropriate clearing account may be suitable depending on your accounting setup. Your accountant or bookkeeper should determine the appropriate account type and tax treatment.

Take note of the account's Xero Chart of Accounts code.

If you are using a Xero account that is not a normal bank account, ensure it is configured in Xero to accept payments as required.

Refer to Xero Help for current instructions on creating and configuring accounts.

In HirePOS:

1. Go to Setup > Bank Accounts.

2. Create a new account, or edit an existing account, to use as the Pin Payments clearing account.

3. Enter a name such as Pin Payments Clearing Account.

4. In the Xero Code field, enter the Chart of Accounts code for the corresponding clearing account in Xero.

5. Save the account.

The Xero Code is used to map the HirePOS bank account to the corresponding account when payments are exported to Xero.

In HirePOS:

1. Go to Setup > Preferences.

2. Open APIs & Integrations > Pin Payments.

3. Select the Pin Payments Clearing Account as the bank account used for Pin Payments transactions.

4. Save your changes.

Payments processed through the HirePOS Pin Payments integration can then be recorded against this account rather than directly against your normal business bank account.

Use the HirePOS Xero exporter as normal.

Where required:

1. Export the invoice using the Invoices exporter.

2. Export the associated payment using the Payments exporter.

After exporting:

• the invoice exists in Xero;

• the customer payment is applied against that invoice; and

• the payment is allocated to the Pin Payments clearing account.

This means HirePOS and Xero both record that the customer has paid, even though Pin Payments may not yet have deposited those funds into your business bank account.

Do not create another customer payment in Xero when the settlement arrives. The customer payment has already been exported from HirePOS. The settlement is the movement of the collected funds from the clearing account to your business bank account.

When Pin Payments settles funds, the net settlement appears in the bank feed for your business bank account.

For example:

• $100 was collected from the customer.

• The $100 payment is already recorded against the Pin Payments clearing account.

• Pin Payments deducts $2 in processing fees.

• $98 appears in the business bank account.

When reconciling the $98 deposit in Xero, you can generally use the Create option to record the settlement against the Pin Payments clearing account.

Using this simplified example, the reconciliation may look similar to:

• Who: Pin Payments

• What: Pin Payments Clearing Account

• Why: Pin Payments settlement

• Amount: $98

This accounts for the $98 received into the business bank account and reduces the amount represented by the Pin Payments clearing account.

The exact Xero fields and reconciliation workflow may vary depending on your Xero configuration. Refer to Xero's current reconciliation documentation for detailed instructions.

Xero Help: Reconcile payments received from online sales

Pin Payments generally deducts processing fees before depositing settlements into your business bank account.

These fees need to be accounted for separately from the customer payment.

In the simplified example:

$100 customer payment - $98 settlement = $2 processing fee

Use your Pin Payments statements, transactions and settlement records to determine the actual processing fees.

The fees can then be recorded in Xero against the clearing account using the expense account, tax treatment and frequency recommended by your accountant or bookkeeper.

For example, your accounting professional may choose to record the fees against a merchant fees or bank fees expense account.

Fees may be recorded per settlement, periodically or using another suitable reconciliation process.

Xero's online sales reconciliation guide also covers handling payment processor fees.

The clearing account provides a useful way to identify Pin Payments transactions that have not yet been completely accounted for.

A remaining balance may represent:

• recent payments waiting for Pin Payments settlement;

• processing fees not yet recorded;

• refunds or adjustments;

• settlements containing multiple transactions; or

• payments or settlements that have not yet been exported or reconciled.

The clearing account does not necessarily need to be $0 at all times. Recent Pin Payments transactions may legitimately still be waiting for settlement.

Compare unexpected balances against your Pin Payments transaction and settlement records.

The $100 represents the amount paid by the customer.

The $98 represents the net amount Pin Payments deposited after deducting fees in this example.

The difference should not normally be removed from the original customer payment. Instead, the clearing-account workflow allows the gross customer payment, net settlement and processing fee to be accounted for separately.

This is normal.

Pin Payments may combine multiple card transactions, refunds, fees and adjustments into a single settlement.

The HirePOS payments can still be exported individually to the Pin Payments clearing account. The later Pin Payments settlement is then reconciled against that clearing account.

Use the Pin Payments settlement records to determine what makes up the amount deposited into your bank account.

No.

A balance may simply represent payments that Pin Payments has collected but not yet settled, or fees and other adjustments that have not yet been accounted for.

An unexplained or older balance should be compared with your Pin Payments settlement records and reviewed with your accountant or bookkeeper where required.

The clearing account acts as the bridge between the full customer payment recorded through HirePOS and the net amount later deposited by Pin Payments:

Customer payment → HirePOS → Xero Pin Payments clearing account → Pin Payments settlement → Business bank account

Processing fees, refunds and other adjustments account for differences between the gross payments and net settlements.

HirePOS controls which Xero account the exported Pin Payments payment is mapped to. The subsequent settlement, reconciliation and accounting treatment takes place in Xero and should follow Xero's current documentation and the process recommended by your accountant or bookkeeper.