What is Net settlement?

Payout model where the acquirer deducts fees, refunds, and chargebacks from gross transactions before funding; the merchant receives one net figure.

Net settlement is a payout model where the acquiring bank disburses funds to a merchant's nominated bank account after deducting all applicable transaction fees, refunds, and chargebacks.

Rather than funding the gross value of all successful authorisations, the acquirer calculates a single net amount, which represents the sum of approved transactions less any deductions, before initiating a single BACS or Faster Payments transfer.

This consolidated payout means the merchant receives one final figure for a specified settlement period, typically daily, representing their total earnings after all adjustments.

From a merchant's perspective, this model simplifies the incoming bank statement entries, as only one net amount is credited, rather than multiple gross transactions and separate debits for fees.

However, this approach can complicate reconciliation because the detailed breakdown of fees, refunds, and chargebacks is not directly visible on the bank statement. Net settlement differs from gross settlement because the merchant receives a single, pre-deducted payment rather than the full transaction amount.

A specific challenge arises when a merchant needs to trace individual transaction fees or understand the impact of a particular refund on their daily payout, as these details are only available through the acquirer's reporting portal, not the bank statement itself.