The sales report shows SAR 11,500, but the payment provider transfers only SAR 11,385 to the bank. Is a sale missing? Not necessarily. The difference could be a collection fee and its tax. Recording the entire bank transfer as sales conceals charges, can mix output VAT with revenue and makes payment-method comparisons unreliable.
Payment fees deserve a clear account because they recur across transactions. A small collection-cost difference can become significant as order volume grows, particularly when basket sizes and return rates vary. Start with the settlement statement, contract and invoice rather than guessing the fee percentage from the cash received.
From the customer's payment to the bank deposit
Assume a domestic sale subject to Saudi Arabia's standard VAT rate, worth SAR 10,000 before tax. The customer pays SAR 11,500. In this illustration the provider charges SAR 100 plus SAR 15 VAT on its fee, then transfers the remainder. These are hypothetical charges, not a published provider tariff.
| Item | SAR | Meaning |
|---|---|---|
| Sale before VAT | 10,000 | Revenue when recognition requirements are met |
| Output VAT | 1,500 | A tax liability, not profit |
| Customer payment | 11,500 | Gross payment transaction |
| Provider fee before VAT | 100 | Cost of the collection service |
| VAT on the fee | 15 | Requires evidence and a deductibility assessment |
| Net bank transfer | 11,385 | Cash received by the business |
The reconciliation is 11,500 − 100 − 15 = SAR 11,385. Revenue does not fall to the transfer amount, and the entire difference does not automatically become an expense. Tax remains separate. VAT charged on the fee needs an invoice and treatment consistent with the business's applicable deduction conditions. Another provider may use different charges or collect them later; the contract and actual documents govern.
If the sale and electronic receipt are initially tracked through an amount due from the provider, settlement clears that balance against the bank, fees and appropriate tax treatment. Outstanding provider balances can then be explained without recording the sale again.
The advertised percentage is only part of the price
A contract can combine a percentage of transaction value, a fixed amount per transaction, subscription charges and additional costs for certain transaction types or disputes. Compare total cost using the business's actual activity. A plan suited to a few large orders may be expensive for many small orders, even with a lower advertised percentage.
In a separate example excluding tax, a hypothetical offer charges 1% of sales plus SAR 1 per transaction. SAR 100,000 of sales across 1,000 transactions costs SAR 1,000 + SAR 1,000 = SAR 2,000. The same sales across 100 transactions cost SAR 1,000 + SAR 100 = SAR 1,100. Transaction count explains the difference; sales did not change.
Define the denominator when reporting a collection-cost rate: gross payments or net sales before VAT? Either can serve a management purpose if consistently labelled. Comparing a tax-inclusive denominator with a tax-exclusive one produces a misleading result.
A refund does not necessarily reverse the fee
Refunding the customer and adjusting the original fee are different events. Some contracts return part of the charge; others retain it or add processing costs. Do not assume every return reverses the sale, collection and fee in the same way. Link the refund reference to the original payment and check its actual treatment in the provider statement.
Today's settlement may also deduct a refund for a sale from the previous week. Comparing that net settlement only with today's sales makes a normal timing difference look like an error. Separate collections, refunds, fees, retained amounts and earlier adjustments, then connect them to their periods and references. Any remaining provider balance needs an explanation, whether normal settlement timing or a disputed amount.
What should you negotiate?
Prepare transaction counts, average values, transaction types, total fees, refund rates and time to receive cash. Calculate the proposed tariff against that same activity. A saving of a few tenths of a percentage point can be offset by a higher fixed fee or materially slower settlement.
Also compare statement clarity, traceable references and support for resolving differences. Price matters, but the time accounting spends explaining every transfer has a cost too. The useful outcome is knowing what the business paid for, what remains due to it and which contractual terms deserve attention at renewal.
Sources & further reading
Visit the original source to explore the concept and its wider context.
General educational content. Appropriate treatment depends on your business and accounting policies; consult your accounting professional when applying it to business records.
