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# Understanding Payout Fees

## Overview

Every payout has a processing fee. Like pay-in fees, each payout fee dimension supports three **fee payer modes** — `user`, `merchant`, and `invoice` — configured independently per fee type. By default, every fee dimension is set to `user`: the fee is deducted from the withdrawal amount, so the customer receives less than they requested. Reach out to the Coinflow team to move a fee dimension to `merchant` or `invoice` mode.

> **This is the same concept as pay-in fees, applied to payouts**
>
> See [Fee Pass-Through](/guides/checkout/checkout-overview/understanding-fee-pass-through) for how these three modes work on the checkout side. The mechanics are the same; only the direction of money movement differs — pay-in fees are added on top of a charge, payout fees are deducted from a withdrawal.

## The three modes

#### Customer pays (default)

Fee payer mode: `user`

The processing fee is subtracted from the withdrawal amount before the customer receives funds. This is the default for every fee dimension unless your account has been configured otherwise.

**`Example — $100 withdrawal, $2.50 processing fee`**

```text title="Example — $100 withdrawal, $2.50 processing fee"
Requested amount: $100.00
Processing fee:     $2.50
Customer receives: $97.50
```

> **Info**
>
> These example amounts are illustrative only. Your actual processing fee is set in your MSA — contact the Coinflow team to confirm your rates.

#### Merchant pays

Fee payer mode: `merchant`

The customer receives the full requested amount. The fee is charged to you instead, deducted from the funding you send for that payout at the time it's processed.

**`Example — $100 withdrawal, $2.50 processing fee, merchant pays`**

```text title="Example — $100 withdrawal, $2.50 processing fee, merchant pays"
Requested amount: $100.00
Customer receives: $100.00
Fee charged to you:  $2.50 (settled inline with the payout)
```

> **Turning this on**
>
> Merchant-pays isn't the default. Contact the Coinflow team to move a fee dimension to `merchant` mode, or see [Add Your Own Payout Fees](/guides/payouts/payout-scenarios/custom-withdraw-fees) for the dashboard toggle that covers the processing fee.

#### Invoice

Fee payer mode: `invoice`

The customer receives the full requested amount, exactly like merchant-pays. The difference is **when and how you're charged**: instead of being deducted from that payout's funding immediately, the fee accrues against your account and Coinflow invoices you for the accumulated total at the end of your billing period.

**`Example — $100 withdrawal, $2.50 processing fee, invoice mode`**

```text title="Example — $100 withdrawal, $2.50 processing fee, invoice mode"
Requested amount: $100.00
Customer receives: $100.00
Fee charged to you:  $2.50 (added to your running invoice balance)
```

> **Same net cost, different cash-flow timing**
>
> Whether a fee dimension is set to `merchant` or `invoice`, you ultimately pay the same amount. `merchant` mode nets it out payout-by-payout; `invoice` mode bills it to you in bulk later. Choose based on how you want the cash flow to hit your books, not because one is cheaper than the other.

> **Turning this on**
>
> Invoice mode isn't the default and is configured per fee dimension. Contact the Coinflow team to enable it for your account.

## Fee dimensions are independent

You can set different modes for different fee dimensions — they aren't all-or-nothing:

#### Processing fee

Coinflow's base per-withdrawal fee (a fixed amount plus a percentage of the withdrawal, with an optional minimum/maximum). This is the fee the "Cover Processing Fees" dashboard toggle controls.

#### Network/conversion fees

Additional costs that can apply depending on the payout method or destination, configurable independently of the processing fee.

#### Custom fees

If you've configured your own additional fee on top of Coinflow's processing fee, that custom fee is always charged to the customer — the fee payer mode only applies to Coinflow's own processing and network fees, not to fees you've added yourself.

> **First-party payouts**
>
> When you withdraw to your own merchant-owned destination (rather than a customer's), custom fees are skipped entirely — they only apply to customer withdrawals.

## What you'll see in the withdrawal data

A completed withdrawal reports fees split into a `user`-paid bucket and a `merchant`-paid bucket, broken out by dimension. For a customer-pays (`user`) fee, the amount appears under the user bucket and is subtracted from what the customer receives. For a merchant-pays or invoice fee, it appears under the merchant bucket instead — and if it's on invoice mode, it's also reflected as an outstanding balance attached to the invoice it will be billed on.

> **Info**
>
> The total withdrawal amount reported is always the **gross** requested amount. To get what the customer actually received, subtract the user-paid fees from that gross amount.

> **Don't confuse this with invoiced pay-in fees**
>
> If you've moved a checkout (pay-in) fee dimension to invoice mode, that's billed the same way — via a monthly invoice — but it's a separate configuration from the payout fee payer modes described here. See [Fee Pass-Through](/guides/checkout/checkout-overview/understanding-fee-pass-through) for that flow.