Payments and fintech
Basis points (bps)
One hundredth of a percent: 100 basis points make 1 percent.
Facts checked against sources onWhat does Basis points (bps) mean?
A basis point is 0.01 percent, so 100 basis points equal 1 percent. Finance people use basis points to talk about small rates and changes precisely. Example: if a fee falls from 1.25 percent to 1.10 percent, it has fallen by 15 basis points. Saying it fell by "0.15 percent" could be confused with a relative change, so basis points are clearer, in the same way that percentage points are clearer than percent. Payment fees, bank margins, fund fees and interest rate moves are usually quoted in basis points.
Where does it come up in case interview prep?
- Macro forces that move casesLesson in Markets and economies: the world a case lives in
- Europe and the UK for case solversLesson in Regions for case solvers: the big markets of the world
- The United States for case solversLesson in Regions for case solvers: the big markets of the world
- Reading a real results release: Inditex, FY2025Lesson in Reading a business through its numbers: the three statements, cash and value
- Bank unit economics: is a loan worth making?Lesson in Retail and commercial banking
- How payments work: cards, real-time payments, wallets, BNPL, and remittancesLesson in Payments and fintech
- Payments unit economics: what one transaction earnsLesson in Payments and fintech
- How asset and wealth management worksLesson in Asset and wealth management
Related terms
- Percent versus percentage pointsA change in a rate is measured in points; its relative change in percent.
- Take rateThe share of each transaction's value that a platform keeps as revenue.
- Net interest margin (NIM)What a bank earns on its loans and investments after paying for its funding, as a share of those assets.
- Interchange feeThe fee the merchant's bank pays the cardholder's bank on each card payment.
- Merchant discount rate (MDR)The total fee a merchant pays to accept a card or digital payment.
- IssuerThe bank or firm that gives a customer a card and, for credit cards, takes the credit risk.
- AcquirerThe bank or firm that lets a merchant accept card payments.
- Card scheme (card network)The network that sets the rules and connects issuers and acquirers, such as Visa or Mastercard.
Learn it in context
See Basis points (bps) at work in a lesson from Markets and economies: the world a case lives in, with checks as you go.
Spotted something wrong or out of date? Report a mistake. We check every report and correct the page.