The soldier was charged last week and pleaded guilty to stealing a credit card from the home of a Palestinian, later using it to withdraw NIS 1,600 ($400).
His attorney, Shai Roda, has wired NIS 1,620 ($405) cash to the Palestinian's attorney along with a letter of apology.
"I am writing you on my client's behalf, he expresses his regrets and sincere apologizes for withdrawing funds from your client's account. My client wants to right his wrongdoing and return the money," Roda wrote.
The soldier's trial has been scheduled for Wednesday. He will be charged with looting. The Palestinian has been barred from testifying as he is suspected of acts of terror. Police said various explosive devices were found in his home.
The case of the looting soldier is the first of its kind to have been investigated following Operation Cast Lead. His arrest was facilitated by footage from cameras posted at the ATM from which he withdrew the money.