About This Template
For payments businesses — whether a pure-play payment facilitator, an EMI with a card programme, or a fintech with embedded payments — understanding the economics of the payment stack is one of the most important financial capabilities the CFO must have. Payments P&L is deceptively complex: the revenue line is often gross (before interchange costs and scheme fees), the cost structure involves multiple layers of per-transaction charges that vary by card type and volume tier, and the resulting net margin is typically expressed in basis points rather than percentages.
Investors and board members expect the CFO of a payments business to be able to answer three questions fluently: what is our net margin per transaction in basis points? What happens to unit economics at different volume levels? And how does our acceptance cost break down across card types and schemes? This template gives you the structure to answer all three.
The template is structured around four sheets: a P&L by payment type, a per-transaction unit economics view, a scheme fee waterfall, and an instructions sheet. Together they provide the financial model of your payments business that an investor, board member, or acquirer will expect to see.
What's Included
Sheet 1 — Instructions
An overview of payments P&L structure, the key concepts of gross/net revenue, the role of interchange in the economics, and how to interpret net margin in basis points (bps). Includes a glossary of payments terminology and notes on how to populate each sheet.
Sheet 2 — Payments P&L
The headline P&L view, structured by payment type across five columns: Card Payments, Account Payments (Faster Payments / BACS), FX/International, Crypto (if applicable), and Total. For each column, the model captures:
- Gross Transaction Volume (GTV)
- Take Rate (%) and Gross Revenue
- Interchange Income (for card issuing businesses)
- Float Income (interest on safeguarded funds)
- FX Spread Income
- Total Revenue
- Interchange Costs, Scheme Fees, PSP/Acquirer Fees, Banking/Settlement Fees, Fraud/Chargeback Losses
- Total COGS, Gross Profit, and Gross Margin %
Sheet 3 — Unit Economics
A per-transaction economics view, expressed in pence per transaction and net margin in basis points (bps). Inputs include the average transaction value and per-transaction cost components; outputs show the net revenue per transaction and how this scales at different volume levels: 100k, 500k, 1m, and 5m monthly transactions. This is the view that investors most commonly request when evaluating payments businesses, and the view that most clearly shows the operating leverage inherent in a payments model.
Sheet 4 — Scheme Fee Waterfall
A breakdown of card acceptance costs by card type (UK Debit, UK Credit, Commercial, EU Consumer, International) and scheme fee component (authorisation fees, clearing fees, Network Access Fees / NAF, cross-border assessments). The waterfall model shows how total acceptance cost is built up from individual fee components, and allows you to model the impact of volume growth on weighted average acceptance cost — including the effect of volume tier thresholds in scheme pricing.
How to Use This Template
- Start with your acquirer or PSP pricing schedule. The most critical inputs in this model are the interchange rates and scheme fees. These come from your acquirer (for card acquiring) or your card programme manager (for card issuing). If you are on an interchange-plus-plus pricing model, you will have separate line items for interchange, scheme fees, and the acquirer/PSP margin. If you are on a blended rate, you will need to decompose it to use this model accurately.
- Enter your gross transaction volumes by payment type. Start with actuals from your payment processor reporting. Separate card volumes from account-to-account payments (Faster Payments, BACS) and FX transactions, as the cost structure for each is materially different. Card payments carry interchange and scheme fees; Faster Payments carry a flat per-transaction cost; FX carries a spread cost.
- Calculate your take rate. Your take rate is your gross revenue as a percentage of GTV. For a merchant acquirer, this is the Merchant Service Charge (MSC) rate. For an embedded payments provider, it may be a fixed fee per transaction. Enter the take rate or the flat fee in the P&L sheet and the gross revenue will be calculated automatically.
- Populate the Unit Economics sheet. Enter your average transaction value and the per-transaction cost components from your pricing schedule. The volume scenario table will then show you the net revenue at each volume level, making the operating leverage of your payments model visible.
- Use the Scheme Fee Waterfall to understand your acceptance cost. Enter your monthly volumes by card type and the applicable fee components. The waterfall will show you your total acceptance cost and the weighted average cost per transaction, broken down by fee type. This is useful for negotiating with your acquirer and for identifying which card types are most expensive to accept.
- Review the model quarterly against actual P&L. Compare the modelled unit economics against actual reported figures at least quarterly. Divergences — particularly in scheme fees, which often include retroactive adjustments and true-ups — should be investigated and the model updated.
Frequently Asked Questions
What is a good net margin for a payments business, expressed in basis points?
Net margin in bps varies significantly by business model. A merchant acquirer competing on price in the commodity acquiring market might operate at 5-15 bps net margin. A specialised payments provider serving a higher-value niche (cross-border B2B payments, crypto on/off-ramps, embedded finance) might achieve 30-80 bps or more. The key driver is not just the headline rate but the mix of payment types — card payments carrying interchange and scheme fees have a lower net margin than account-to-account payments or FX transactions where the firm controls the spread. A payment business with a healthy unit economics model at scale should be targeting at least 15-25 bps net margin on card transactions, and higher on FX and account payments.
What is interchange++, and how does it differ from a blended rate?
Interchange++ (pronounced "interchange plus plus") is a card pricing model where the merchant or payments business pays three separate components: the interchange fee (set by the card scheme and passed through at cost), the scheme fee (also set by the card scheme), and the acquirer's margin (a separate per-transaction or percentage fee). This gives full visibility into each cost component and is generally the most transparent and cost-efficient pricing model for businesses with significant card volumes. A blended rate, by contrast, combines all three components into a single percentage — it is simpler to understand but typically more expensive and hides the underlying cost structure, making it harder to model, negotiate, or optimise. Most businesses processing more than £500k per month should be on or moving to interchange++ pricing.
How do scheme fee volume thresholds work?
Card scheme fees (Visa and Mastercard) include a number of components that operate on tiered pricing — the rate per transaction decreases as you cross certain monthly or annual volume thresholds. For example, authorisation fees might decrease from 0.025% to 0.020% above a certain monthly volume band. These thresholds vary by scheme, by card product, and by geography. The practical implication for CFOs is that scheme fees are not linear with volume — they step down at certain volume levels, creating a form of operating leverage. The Scheme Fee Waterfall in this template allows you to model these thresholds so that you can identify the volume levels at which your unit economics improve most materially.
Should float income be included in the payments P&L?
Yes, but clearly labelled and segmented. Float income — interest earned on safeguarded customer funds held in segregated accounts — is a genuine revenue stream for EMIs and PIs and should be reflected in the P&L. However, it is sensitive to interest rate movements and is not directly correlated with payment volumes, so it should be modelled and reported separately from transaction revenue. In a higher interest rate environment (as in 2023-2025), float income can be a material revenue contribution for EMIs with large average balances. The P&L template includes a dedicated row for float income to ensure it is captured but not conflated with transaction revenue.
How should chargebacks and fraud losses be modelled?
Chargebacks and fraud losses are a direct cost of the payments business and should be included in COGS, not treated as exceptional items. The model uses a fraud/chargeback loss allowance expressed as a percentage of GTV or as a per-transaction allowance — this should be calibrated against your actual fraud and chargeback data. For most well-managed card businesses, fraud losses should be below 0.1% of GTV (10 bps); for merchants in higher-risk categories, this may be 0.2-0.5% of GTV. Chargeback costs include both the transaction reversal itself and the chargeback processing fee (typically £15-30 per chargeback from your acquirer). High chargeback rates can also result in scheme-imposed remediation programmes or even loss of accepting privileges, so this metric should be monitored monthly.
What is the difference between Faster Payments economics and card payment economics?
Account-to-account payments (Faster Payments, BACS, SEPA) have a fundamentally different cost structure from card payments. There is no interchange (there is no card issuer sharing in the economics), and scheme fees are low — Faster Payments are typically priced at a flat per-transaction cost of 1-5 pence for most volumes, depending on the aggregator or direct connection. This means that account-to-account payments have materially better unit economics for the payment provider than card payments at the same transaction value. A payment provider that can shift volume from card to account-to-account — through open banking or variable recurring payments (VRP) — can significantly improve its net margin on those transactions. The P&L template separates card and account payments to make this difference visible.
