# External transaction fee

Source: https://docs.settlemint.com/docs/operators/token-features/external-transaction-fee
How operators configure the external-transaction-fee token feature to charge fixed fees in a separate ERC-20 asset for mint, burn, and transfer operations.



The external-transaction-fee token feature charges a fixed fee in a separate ERC-20 token (the fee token) for each mint, burn, or transfer operation. Unlike [transaction-fee](/docs/operators/token-features/transaction-fee), which deducts a percentage from the operation amount in the operated asset, external-transaction-fee transfers a fixed amount in a different asset altogether.

Use external-transaction-fee for securitised-pool fee accrual, fund-of-fund operating fees paid in a stable denomination, or any model where the fee should not reduce the operated asset's balance.

For the architecture reference, see [External transaction fee](/docs/architects/components/token-features/external-transaction-fee).

## When it attaches [#when-it-attaches]

The asset-backed-token template (`system-asset-backed-token`) attaches external-transaction-fee. Custom templates may also use it.

## What you configure [#what-you-configure]

In the Asset Designer details step, the wizard surfaces:

| Parameter     | Description                                                                                                     |
| ------------- | --------------------------------------------------------------------------------------------------------------- |
| `feeToken`    | ERC-20 asset the fee is paid in. Must exist in the tenant or be registered as an external token.                |
| `mintFee`     | Fixed fee on mint operations, in the fee token's base units.                                                    |
| `burnFee`     | Fixed fee on burn operations.                                                                                   |
| `transferFee` | Fixed fee on holder-initiated transfers.                                                                        |
| `recipient`   | Wallet that receives the collected fee-token balance. If omitted during token creation, DALP uses the deployer. |

The fee-token prerequisite is checked during template selection: if no compatible ERC-20 exists in the tenant, the template card is disabled until the operator creates or registers one.

## What you operate [#what-you-operate]

After deployment:

* **Operations require fee-token allowance** from the holder to the external-transaction-fee feature contract. Holders must approve that fee-token spending before they can transact under this asset, similar to standard ERC-20 fee-payment flows.
* **Fees collect automatically** as operations happen. The recipient wallet accrues fee-token balance directly.
* **Inspect collected fees** on the asset detail workspace's external-transaction-fee tab, or through `GET /api/v2/tokens/{tokenAddress}/external-transaction-fee/collection-events` when you need the indexed collection history for reconciliation.

## Operating considerations [#operating-considerations]

* The fee is in a different asset. Operators monitor the recipient's fee-token balance separately from the asset's own balance views.
* Operations fail if the holder lacks sufficient fee-token balance or allowance. Communicate the fee-token requirement clearly during holder onboarding.
* Fee amounts, recipient, fee token, and freeze state are updated through governance-controlled feature routes: `PATCH /api/v2/tokens/{tokenAddress}/features/external-transaction-fee/amounts`, `PATCH /api/v2/tokens/{tokenAddress}/features/external-transaction-fee/recipient`, `PATCH /api/v2/tokens/{tokenAddress}/features/external-transaction-fee/token`, and `POST /api/v2/tokens/{tokenAddress}/features/external-transaction-fee/rate-freezes`. Updates apply forward.
* Changing the fee token mid-life is rare and requires careful migration; restricted-mutable updates apply forward, but holders need to grant allowance in the new token before they can transact.

## Troubleshooting [#troubleshooting]

| What you see                                           | What to check                                                                                                                            |
| ------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------- |
| Transfer fails with "insufficient fee-token allowance" | The holder must approve the external-transaction-fee feature contract to spend the fee token. Communicate this before transfer.          |
| Holder has fee-token balance but transfer fails        | Confirm the allowance amount covers the configured fee for the operation. Allowance can be insufficient even when balance is sufficient. |
| Need percentage-based fee in the same asset            | Use [transaction-fee](/docs/operators/token-features/transaction-fee) instead.                                                           |

## Read next [#read-next]

* [External transaction fee architecture](/docs/architects/components/token-features/external-transaction-fee)
* [Transaction fee](/docs/operators/token-features/transaction-fee) for percentage-based fees in the same asset.
* [System templates catalog](/docs/operators/asset-creation/system-templates#structured-products-asset-class-structured)