I own a website that allows members to post things for sale. Buyers buy the items via our merchant services account and we forward payment to the seller less our 1.75% fee.

My question is do we need to pay taxes on the full income of the total sale or our 1.75% fee?

What type of taxes? Sales, excise, business ?
This appears to be a state and local specific question. Contact your local jurisdiction or consult a tax professional.

If you are talking about Federal Income tax it is paid on net income after deductions less any credits or loss carryforward. Contact the IRS directly or consult a tax professional.