Payments and fintech
Take rate
The share of each transaction's value that a platform keeps as revenue.
Facts checked against sources onWhat does Take rate mean?
Take rate is a platform's revenue divided by the value of the transactions it handles, such as gross merchandise value (GMV) for a marketplace or total payment volume for a payments firm. Example: a food delivery app handles 1,000 million of orders and earns 200 million in commissions and fees, so its take rate is 20 percent. A payments firm handling 100 billion and earning 300 million has a take rate of 0.3 percent, or 30 basis points. A higher take rate is not always better: pushed too far, it drives sellers or merchants to rival platforms.
Where does it come up in case interview prep?
- Crack any case in five movesLesson in What a case interview is, and how to prepare
- Business models: who pays, and for whatLesson in How industries work: the toolkit
- Network effects: when each user makes it betterLesson in Why some businesses win: competitive advantage and the economics of strategy
- Channel economics across industries: direct, retail, marketplaces, distributors and sales teamsLesson in Customers and growth: the economics of marketing
- How e-commerce and marketplaces make moneyLesson in E-commerce, marketplaces, and quick commerce
- Order economics: last mile, dark stores, and returnsLesson in E-commerce, marketplaces, and quick commerce
- 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
Related terms
- Gross merchandise value (GMV)The total value of goods or services sold through a platform.
- Basis points (bps)One hundredth of a percent: 100 basis points make 1 percent.
- Merchant discount rate (MDR)The total fee a merchant pays to accept a card or digital payment.
- Multi-homingWhen users or sellers use several competing platforms at the same time.
- Interchange feeThe fee the merchant's bank pays the cardholder's bank on each card 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 Take rate at work in a lesson from What a case interview is, and how to prepare, with checks as you go.
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