Fee Calculation
Learn how platform fees, taxes, and service fees are calculated in an escrow transaction, and how different fee-payer models shift the burden between buyer and seller.
The Split Plan
Every escrow has a splitPlan that defines exactly how funds are distributed upon successful completion. The split plan tracks three core values in cents:
Seller Payout
The final net amount deposited into the seller's account upon release.
System Fee
The base SwitchLock platform fee (usually 1.0% or custom negotiated rate) plus any applicable IMTT tax.
Service Fee
Your company's markup fee, configured at the tenant level.
Fee Payer Models
When initiating an escrow, you can pass an optional feePayer field. This determines whether the fees are added on top of the buyer's cost or deducted from the seller's payout.
The buyer pays exactly the sum of the line items. The total fees are deducted from the seller's final payout.
- total_amount = item_total
- seller_payout = item_total - total_fees
The seller receives exactly the sum of the line items. The total fees are added on top, increasing the total amount locked from the buyer's wallet.
- total_amount = item_total + total_fees
- seller_payout = item_total
The total fees are divided exactly 50/50. Half is added to the buyer's cost, and half is deducted from the seller's payout.
- total_amount = item_total + (total_fees / 2)
- seller_payout = item_total - (total_fees / 2)
If you pass a custom splitPlan in your initiation request, the system ignores the feePayer enum and strictly enforces the manual system_fee_cents, service_fee_cents, and seller_payout_cents you provided.
Milestone & Partial Releases
SwitchLock automatically calculates proportional fees for milestone escrows and negotiated partial refunds.
Milestone Proportionate Distribution
When a milestone is released, the system pays out exactly that milestone's configured percentage of the splitPlan.seller_payout_cents. The remaining percentage is held until subsequent milestones are released. Any rounding remainder on cents is applied to the final milestone.
Negotiated Refunds (Disputes)
If a dispute negotiation results in a lower total payout than the original escrow, the difference between the new total and the originally locked amount is refunded instantly to the buyer when the proposal is accepted.