Fee netting is a settlement arrangement in which a payment provider subtracts its charges before paying over the money it has collected. A merchant whose customers paid 10,000 in card sales, with fees of 250, receives 9,750. It is an application of netting to fees, and it is the default for most card acquirers, payment facilitators and marketplaces, which deduct the merchant discount rate, and often refunds and chargebacks, from each payout.
The alternative is gross settlement of the sales with fees invoiced or debited separately, usually monthly, from a fee account. Netting suits the provider, which is paid at once and carries no credit risk on its fees. For the merchant it complicates payment reconciliation, since the bank credit no longer equals the sales total and must be explained from the provider's settlement report. Accounting rules still require revenue to be recorded gross, with fees shown as an expense. Larger merchants therefore often negotiate gross settlement.