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Netting is a process used to streamline payments between parties by offsetting mutual debts and obligations. In the context of cross-border payment techniques, TARGET (Trans-European Automated Real-time Gross Settlement Express Transfer System) participants utilize a form of netting to consolidate multiple payment transactions into a single net payment for settlement. This is particularly important in the European financial system, where it allows for efficient clearing of payments among various banks and financial institutions involved in cross-border transactions.

The TARGET system plays a critical role in the Eurozone, enabling participants to settle their euro-denominated transactions in real time. It effectively reduces the liquidity needed by each participant and minimizes the number of transactions, leading to greater efficiency within the payment system.

European giro providers may engage in similar practices, but their primary focus is on domestic payment systems rather than cross-border payments. Foreign subsidiaries of a company mainly address internal transactions and do not typically engage in netting as a cross-border payment technique. Counterparties in a letter of credit transaction are more focused on individual contracts rather than the cumulative netting of multiple obligations, which is the purpose of netting in the context of TARGET participants.