When a Merchant settlement is created we net out 2 types of fees:
1) PLATFORM_FEES: Defined via Fee Profiles which you are seeing in the dashboard
2) APPLICATION_FEES: Set when capturing an Authorization
PLATFORM_FEES are generated by Fee Profiles that represent a pricing scheme that is automatically applied to each transaction. When the Merchant receives a settlement the resulting fees are automatically deducted and disbursed as a credit to the payment facilitator. Fee profiles support interchange plus, percentage-based pricing (e.g. 2.9%) and fixed-based fees (e.g. $0.20 per transaction).
Furthermore, Fee Profiles follow a tree-like data structure - all Applications and subsequently their Merchants inherit from a single default Fee Profile but can be overridden to set custom billing for individual Applications or Merchants. We set the default Fee Profile during implementation. Note, that by default both an Application’s and a Merchant’s Fee Profiles will be set to null. When a Merchant’s fee profile is set to null then it inherits from the parent node, which in this case is the Application. If the Application is also null then it inherits from the default Fee Profile.
APPLICATION_FEES are primarily utilized by the PayFacs that we work with who have referral partners, ISVs, or ISOs that also take a cut of the Merchant settlement. These fees are allocated to the Application. The APPLICATION_FEE is the difference between the fee amount passed when capturing an authorization and the PLATFORM_FEE that is automatically calculated via the Fee Profiles. This ensures that the PayFac always collects it’s predefined fees.
That said, it is possible to set the Fee Profiles to 0 and have you set all the fees when capturing the Authorization
In either case, the APPLICATION_FEE and PLATFORM_FEES both issue a credit to the PayFac’s operating account