When your business accepts card payments, you can choose to absorb the fee yourself (the default) or pass it along to your client during the payment process.
Credit card fees are deducted from the actual transaction amount rather than being processed as a separate transaction by card networks (e.g., Visa or Mastercard). When a customer pays with a credit card, the total amount is captured, and the fees are deducted before the remaining balance is transferred to your account.
Let's consider an example where your client pays a $100 invoice by card at a 2.99% processing rate fee. If you've chosen to pass the fees to your customer, then from their perspective, the transaction is reflected as a single charge of $102.99, which is $100 (invoice amount) plus the $2.99 (card processing fee). If they have connected their accounting to Forwardly, then it would be recorded in their accounting system as two transactions.
On the other hand, if you had configured Forwardly for your business to absorb the card fees instead of passing them on to your customers, then you would see two transactions in your accounting system: one credit for $100 (the transaction amount) and a debit for $2.99 (the fee).
If the fee is passed to your customer, then they should record the $2.99 as a processing fee expense, which is a deductible business expense. If they issue your business a 1099, then it should report only $100, as that reflects the amount paid for your services or goods. The $2.99 fee is simply to cover the cost of payment processing and is not considered part of your income. Therefore, it does not contribute to the amount reported on the 1099.