# The acronym decoder: speaking fluent fintech
A term sheet lands in your inbox: "Company processes $2.1B TPV annually, MDR of 1.8%, blended CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → of $340, ARPU growing 12% YoY, NIM compressing due to interchange caps." If your eyes glazed over, you are not alone, and you are exactly who this lesson is for.
Fintech runs on acronyms that gatekeep the room. Founders use them to sound credible, investors use them to pressure-test claims, regulators use them to write rules. This lesson decodes the core vocabulary against a real payments business model, so you can read a deck without translating in your head.
Imagine a mid-sized European payments processor pitching for a Series C. Their deck opens with a slide of "key metrics." Let's walk through it line by line.
Definition: the total dollar value of transactions a platform processes, not revenue. If a payments company processes $2.1B in TPV, that's the sum of every card swipe or transfer routed through it.
Why it matters: TPV is a volume metric, not a profit metric. Stripe, Adyen, and PayPal all report TPV because it signals scale and market sharemarket shareThe percentage of total industry sales your company captures in a given period. It measures competitive position relative to rivals in a defined market.Voir la définition complète →, but a company can grow TPV while losing money on every transaction.
Quick check: always ask "what percentage of TPV becomes revenue?" That percentage is roughly the take rate.
Definition: the fee a merchant pays to accept a card payment, expressed as a percentage of the transaction. If MDR is 1.8%, a $100 purchase costs the merchant $1.80.
Where it goes: MDR is split three ways: interchange (paid to the card-issuing bank), a scheme fee (paid to Visa or Mastercard for network access), and the acquirer margin (kept by the payment processor, like Adyen or Worldpay).
Definition: the fee paid from the merchant's bank (acquirer) to the cardholder's bank (issuer) on every transaction, set largely by card networks.
Regulatory context: in the EU, interchange fees are capped under the Interchange Fee Regulation (IFR, 2015) at 0.2% for debit and 0.3% for credit card transactions. In the US, there is no equivalent cap for credit cards, though the Durbin Amendment (part of Dodd-Frank, 2010) caps debit interchange for large banks at roughly 21 cents plus 0.05% per transaction. This is why US merchant fees are typically higher than European ones, a genuine structural difference worth remembering in any cross-market comparison.
Say our processor handles $2.1B in TPV with an average MDR of 1.8%.
Gross merchant fee revenue = $2.1B x 1.8% = $37.8M
If interchange and scheme fees eat 1.2 percentage points of that 1.8%, the processor's own net take rate is only 0.6%.
Net revenue = $2.1B x 0.6% = $12.6M
This is the single most common due-diligence move in payments: separate gross MDR from net take rate, because headline revenue numbers often hide how much is simply passed through to banks and networks.
Definition: total revenue divided by number of active customers over a period. If our processor has 15,000 merchant clients generating $12.6M net revenue annually, ARPU is $840 per merchant per year.
Use case: ARPU trends tell you if a company is growing by adding customers, growing existing customers' spend, or both. Flat ARPU with rising customer count means land-and-expand isn't working yet.
Definition: total sales and marketing spend divided by new customers acquired in a period. A CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → of $340 per merchant, against an ARPU of $840, gives a rough payback period (CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → divided by monthly ARPU) worth checking against gross margingross margin, not just revenue.
The classic sanity check: compare CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow.Voir la définition complète → to LTV (Customer Lifetime Value). A widely used rule of thumb in SaaS and fintech investing is that LTVLTVLifetime Value: the total revenue (or profit) a customer generates throughout their entire relationship with your business.Voir la définition complète → should exceed CACCACCustomer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers gained in a period. It measures how efficiently you grow. by 3x or more to be considered healthy, though this is a heuristic, not a law of physics.
As of 2026, here are the estimates worth carrying in your head (flagged as estimates, sourced from industry trackers like McKinsey's Global Payments Report and the European Central Bank):
Treat all of these as directional, not precise. The point is orders of magnitude: payments is a multi-trillion-dollar volume business earning low single-digit-percentage margins, which is why scale and take-rate discipline matter more than almost anything else in this sector.
Vérification des acquis
1. A payments company's TPV is growing rapidly year over year. What does this tell an investor on its own?
2. Why might a founder highlight TPV prominently on a pitch deck even if the company's take rate is thin?
3. A merchant is charged an MDR of 1.8% on a transaction. Which of these best describes what this fee ultimately funds?
4. Select ALL correct answers about the relationship between TPV and take rate.
Sélectionnez toutes les réponses correctes.
5. Select ALL correct answers about interchange fees.
Sélectionnez toutes les réponses correctes.
When a deck throws numbers at you, run these checks:
1. Is TPV being confused with revenue? They are never the same thing.
2. What's the net take rate, after interchange and scheme fees? This tells you the real economic engine.
3. Is CAC payback measured against gross margin or gross revenue? Gross marginGross marginGross margin is the share of revenue left after subtracting the direct cost of producing goods or services, expressed as a percentage of revenue.Voir la définition complète → is the honest number.
4. Does the ARPU trend reflect price increases or genuine usage growth?
5. What regulatory regime governs the interchange or MDR in question? A US-based comparable is not a like-for-like with an EU-based one, given the IFR cap.
🎬 [VIDEO: "How Payment Processing Works" - youtube.com/@Stripe - a walkthrough of the merchant-acquirer-network-issuer chain that underlies MDR and interchange, useful for visualizing the money flow described above]