Gross Settlement

Gross settlement refers to the process by which an acquiring bank transfers 100% of the customer’s card payment to the merchant, without deducting fees or reserves upfront. In the context of travel businesses, this is particularly important for compliance with the Package Travel Regulations, as it ensures that the full value of client funds is received and protected. With gross settlement, the acquirer transfers the total booking amount to the merchant, while charges such as processing fees are billed separately.

Gross Settlement in Travel Payments

For travel companies, gross settlement provides a key safeguard in protecting consumer funds. By receiving the full value of each booking, operators can demonstrate that client money is properly ring-fenced and compliant with financial protection requirements. This approach contrasts with net settlement, where fees are deducted before funds reach the merchant, meaning that not all customer funds are deposited. Net settlement can make it harder to show that 100% of client money has been secured, which can present compliance challenges.

Benefits of Gross Settlement for Travel Businesses

• Ensures 100% of customer funds are settled, supporting Package Travel Regulation compliance.
• Provides greater clarity and transparency in reconciliation, as charges are billed separately.
• Improves consumer protection, as client funds can be safeguarded in trust or insurance schemes without deduction.
• Enhances trust with regulators and customers, showing that all client payments are handled responsibly.

Gross vs. Net Settlement

• Gross settlement: Acquirer pays the full booking amount to the merchant; fees are invoiced separately.
• Net settlement: Acquirer deducts fees, reserves, or other charges before transferring funds, so the merchant receives less than the total customer payment.

Key Takeaways

• Gross settlement ensures travel businesses receive the full booking value from card payments.
• It supports compliance with Package Travel Regulations and protection of consumer funds.
• Net settlement may complicate fund protection as not all client money is passed on to the merchant.

How Felloh Can Help with Gross Settlement

Felloh works with acquirers that support gross settlement, enabling travel businesses to receive 100% of client funds while handling processing fees separately. This makes it easier to demonstrate compliance, safeguard customer payments, and maintain transparent reconciliation. With clear settlement terms and options to reduce risk such as rolling reserve structures, Felloh ensures travel companies can protect consumer funds while maintaining healthy cash flow.