Gross vs. Net Settlement for Platforms

Frederik von Mohl

Frederik von Mohl

Product & Community

Embedding payments brings complexity - every card type, currency, and network can shift your cost structure. We see platform finance teams wrestling over one foundational question: should you settle gross or net? Let’s walk through the trade‑offs and the signals to weigh.

Net settlement: certainty for customers, uncertainty for platforms

What it looks like

  • Customer receives net amount - everything post‑fee - so they know upfront what they’re charged.
  • Fee transparency builds trust and can simplify accounting, as fees are known in advance.
  • Feels clean, especially for SMBs or high‑volume platforms

Why platforms hesitate

  • IC++ fees (interchange + card scheme + processor) fluctuate based on the many card attributes and geography
  • This unpredictability means billing before costs are fully known risks margin leakage
  • Some customers of platforms may prefer the transparency of one single rate (variable or blended) but finding a single rate for all cards will mean you’re platform might be undercharging on one and overcharging on another

Gross settlement: accuracy with a timing catch

How it works

  • Customer is billed the full transaction value, with fees invoiced later
  • In this setup the platform can determine fees more accurately and opt to pass through IC++ fees to the customer

Major benefits

  • Platforms bill exact costs: no leaks, no lost margin
  • Audit-ready financials with clear reconciliation cycles

Trade‑offs

  • Customers only know and have to pay total fees at month‑end: it may blindside some
  • But enterprise-grade customers (and platforms) often accept this complexity and it aligns with their reconciliation cycle
  • Then there is of course credit risk, or what happens if the customer doesn’t or can’t repay the fees

Net vs gross: how the market leans

  • Start-ups and fast-growth platforms tend to choose net settlement for a more straightforward cashflow, speed and trust-building with SMBs
  • Larger platforms and regulated platforms more often use gross billing with pass-throughs, favouring precision and alignment with reconciliation cycles
  • Hybrid models: net for standard clients, gross for enterprise, complex to handle

A framework for your decision

Use this checklist:

  • Who are your customers? SMBs want speed; enterprise clients expect precision
  • Margin sensitivity? If IC++ variability is material, gross with IC++ pass-through protects profits
  • Ops capacity? Can your team handle monthly reconciliations?
  • Transparency appetite? Do you need to offer real-time fees, or is post‑month detail acceptable?
  • Pricing tiers? Hybrid models can balance simplicity and accuracy
  • Can’t handle the credit risk? Go for a hybrid model where your enterprise customers can opt for gross-settlement as they are less likely to default and keep startups and growth companies on net

Our stance: clarity with flexibility

  • Net settlement offers immediacy and clarity: great for standard tiers. No invoice payment needed from your customers.
  • Gross settlement excels in cost accuracy: vital for enterprise.
  • Hybrid models give you both: choose based on your customer and margin profile. This can get tough to manage for platforms though. Revenew can help.

Best of both worlds:

How about the best of both worlds? Beyond helping you manage a hybrid setup, Revenew can enable you to give you and your customers the most transparent and easy to use setup:

Fees from balance: For those that appreciate the low friction UX of net settlement, but prefer the ability to pass through IC++ fees when they are known and confirmed, platforms can deduct their fees from the balance of their customer, rather than invoice them and wait for payment.

Closing thoughts

Choosing between gross and net settlement doesn’t just impact billing, it shapes your customer experience, margin management, and financial control.

At Revenew we’ve guided finance leaders through these decisions, helping platforms scale payment operations while maintaining transparency and profitability.

If you're reevaluating your model, we’d be glad to assess your setup and talk through your options.