# zero fee settlement flow

Beep Pay is designed so merchants receive **the full USDC amount** while **effective payment costs trend to $0**. We do this with **gas sponsorship + yield-share**: the protocol covers network fees at settlement time and recoups them from opt-in yield sources (merchant float, facilitator pool, or protocol incentives).

Zero-fee here means **merchant net = invoice amount**, not “the chain has no gas.”

<figure><img src="/files/e88SWZaqov4B1Krafmdk" alt=""><figcaption></figcaption></figure>

### How It Works (at a glance)

1. **Invoice**\
   Merchant creates an invoice for `amount = X USDC`.
2. **Payment**\
   Payer signs a USDC transfer to the merchant vault (non-custodial).\
   The facilitator attaches a **gas sponsorship** commitment.
3. **Settlement**\
   Transaction executes; merchant vault receives exactly `X USDC`.
4. **Rebate / Offset**\
   The protocol covers gas from a **sponsor pool** and offsets it via:
   * **Merchant Yield-Share (optional):** use yield from merchant’s idle balance to reimburse the sponsor.
   * **Protocol Incentives:** rebates, credits, or fee waivers from Beep.
   * **Facilitator Float:** dedicated pool that earns yield and absorbs gas.
5. **Receipt**\
   A signed **x402 receipt** is emitted on-chain (verifiable proof of payment + sponsorship details).

### Money Flows

* **Incoming:** `payer → merchant` (USDC)
* **Sponsorship:** `sponsor_pool → network_gas` (native asset)
* **Rebalance:** `merchant_yield or protocol_incentive → sponsor_pool` (periodic)

The merchant always sees **exact invoice amount**. Gas never reduces the credit the merchant receives.

### Yield-Share

If enabled, a tiny portion of the **merchant’s idle USDC** (sitting in the merchant vault) is routed into a low-risk yield source. The realized yield periodically **reimburses** the sponsor pool. If the merchant has no float, Beep can cover costs via protocol incentives.

* No impact on settlement timing.
* Fully non-custodial; merchant can disable at any time.
* Targets conservative, audited sources only.

### Economics (rule of thumb)

Let:

* `G` = gas cost in native units (converted to USDC at tx time)
* `Y` = periodized yield from merchant float (USDC)
* `I` = protocol incentive credit (USDC)

Sponsor pool target: `G - (Y + I) ≤ 0` averaged over N tx.\
If `Y + I < G`, Beep covers the delta; merchant still receives the full amount.


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