I am guessing you have never "T" ed an accounting entry.  Cash Receipt in which you debit cash and credit a sales account. Then write a check to the vendor in which you credit cash and debit an expense account. Your income statement will show the profit.

Problem is the $40 isn't an expense. 

Talk to a CPA.  AFAIK 3rd party services would be an expense to the company in the middle of such a transaction... but I am not an accountant.

I'll pass that advice on to the client. I know enough accounting to handle the basics but this one stumped me.

OK you can use the same GL account for both transactions. Same result.  a $10 balance left in the account.

Only $10 is the 'sale' (service fee) so hitting the Sales Account with the $50 won't do.

Maybe $10 service fee, then $40 to a vendor service clearing account (account type determined by an accountant)... offset entry in an AP invoice, which then gets paid to the vendor?

That seems to make sense. 

I need to setup a provider holding / transfer account to show how money is flowing through the bank account.