Gross Funding vs. Net Funding

Sola remits funds to merchants on the gross funding method.  Stripe remits funds to merchants on the net funding method.  This article explains the difference between the two.  

Gross Funding

With the gross funding model, processors such as Sola/Cardknox deposit the full value of card transactions before deducting any processing fees.

In this setup, 100% of daily card transactions are batched and remitted to the merchant, typically on a T+1 basis (where T is the transaction date, plus one business day). Processing fees are not withheld upfront. Instead, they are aggregated and debited separately via ACH, usually near the end of the month.

Example:
If a merchant processes $10,000 in card payments on a single day and has no additional transactions for the rest of the month:

• They will receive approximately $10,000 in their bank account within 1–2 business days.
• Later in the month, a separate withdrawal of about $300 (assuming a 3% processing fee) will be deducted.

This model provides stronger short-term cash flow visibility, since deposits reflect total sales rather than net proceeds.

Net Funding

Under the net funding model, used by processors such as Stripe, fees are deducted before funds are paid out.

Here, each payout reflects the transaction amount minus processing fees, typically resulting in about 97% of the total transaction value being deposited. Payouts are commonly made on a T+2 basis.

Unlike gross funding, there is no large, end-of-month fee withdrawal, as fees are collected incrementally with each payout.

Example:
If a merchant processes $10,000 in card payments:

• They will receive approximately $9,700 in payouts over the settlement period.
• No additional fee withdrawal will occur later in the month.

This approach simplifies reconciliation, as each deposit already reflects net revenue.

Key Takeaway

• Gross funding: Deposits are made before fees are deducted; fees are collected separately later.
• Net funding: Deposits are made after fees are deducted; no separate fee withdrawal occurs.

In short, gross funding delivers funds “gross of fees,” while net funding delivers funds “net of fees.”