👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.
The best way to “make money” is to be “in the way of the money.”
That’s fintech in a nutshell—facilitating, simplifying, or accelerating transactions.
Once trust is built and infrastructure costs are amortized (a fancy way of saying “paid for”), fintech companies become cash cows. They scale efficiently, with revenue per employee skyrocketing.
But early on, margins are razor-thin, and risk is high.
I learned about “counterparty risk” the hard way—loaning my little brother $10 for the ice cream truck back in 1999. Still waiting on that repayment, Tyler.
Regulations are constantly evolving to protect consumers, making compliance and Anti-Money Laundering (AML) monitoring non-negotiable (and expensive). As a fintech operator, your customers’ risk becomes your risk.
This guide breaks down the key metrics you need to scale a fintech successfully. I’ve dug into investor day presentations from PayPal, Toast, Block, MoneyLion, Coinbase, Affirm, Bill.com, and more to ensure we’re looking at real-world benchmarks.
1. Top Line Metrics
These metrics define overall business health and scalability.
Source: PayPal Q1 2024 Earnings Presentation
Total Payment Volume (TPV)
This is the “big” number: The total dollar amount of sales you facilitate
Marketplace businesses often call this GMV (gross merchandise value), but either way, it’s not your revenue. More on that later.
Annualized Processing Volume (APV)
A forward-looking view on TPV
Think of it like ARR for payments—a proxy for your “run rate” at any point in time
Calculated as the last period’s exit volume (adjusted for calendar days if needed) multiplied by 12
Net Revenues
This is the “real” number: What actually hits your P&L—your real revenue after payouts, interchange fees, and other costs.
To get to net revenue, you need to know your net take rate
Net Take Rate
The percentage of transaction value retained as revenue—your pricing power in a nutshell.
A higher take rate means you’re adding more value. A declining one could signal pricing pressure or the need to renegotiate with payment processors.
For context: PayPal’s take rate is around 1.9% based on recent figures.
Source: 2024 Toast Investor Day
2. Customer Engagement Metrics
These metrics show how often users engage with your platform and how sticky it is.
Source: Block 2022 Investor Day Business Model Presentation
Active Accounts
User engagement depends on the value you provide.
Measurement cadence varies by product:
Annual – TurboTax (Used heavily once a year during tax season)
Quarterly – Credit Karma (Users check their credit score and reports every few months)
Monthly – Amex Membership Rewards (Cardholders redeem points or review statements monthly)
Weekly – Venmo (Frequent peer-to-peer transactions, like paying for shared meals or rent)
Daily – Starbucks App (Loyal customers use it daily for mobile orders and rewards)
Source: Block 2022 Investor Day Business Model Presentation
Transactions
Completed purchases — more transactions = higher engagement and value creation.
Transactions per Active Account
A key measure of engagement intensity — how deeply your platform is embedded in users’ daily lives.
Activation Rate
The percentage of new users completing a key action (e.g., first deposit or transaction).
Activation Rate = (Activated New users / New Signups) x 100
Definitions:
Activated Users = Users who complete a key first action (e.g., first deposit, first transaction, profile setup).
New Signups = Total number of users who signed up in the period.
If 10,000 users sign up in a month, but only 4,000 complete their first transaction, the activation rate is: (4,000 / 10,000) x 100 = 40%
A high activation rate signals strong onboarding and product adoption, while a low rate suggests friction in the user journey.
If users don’t activate, they aren’t really customers.
Referral Rate
The percentage of new users acquired via referrals—a sign of organic growth, customer satisfaction, and trust.
Also, it’s way cheaper than paying for Google Ads.
Source: PayPal Q1 2024 Earnings Presentation
3. Profitability and Efficiency Metrics
These metrics measure how well a company converts activity into profit.
Source: Block 2022 Investor Day Business Model Presentation
Customer Acquisition Cost (CAC)
Total sales and marketing spend (including rebates and referral fees) to acquire a new customer and get them to make their first purchase.
CAC = Total Sales and Marketing Spend / Number of New Customers Acquired
Definitions:
Total Sales and Marketing Spend = Includes ad spend, salaries, software costs, referral fees, and any other costs tied to acquiring customers.
Number of New Customers Acquired = Customers who completed their first purchase or became paying users in the period.
Example: If a company spends $500,000 on marketing and sales in a quarter and acquires 5,000 new customers:
$500,000 / 5,000 = $100
Source: Moneylion Q3 of 2022 Earnings Presentation
Customer Lifetime Value (LTV)
The total net revenue a customer generates before churning.
LTV = Average Annual Revenue per Customer x Gross Margin / Annual Account Churn Rate
Simplified version: LTV = ARPU x Gross Margin x Customer Lifetime
Definitions:
ARPU (Average Revenue Per User per Period) = Total revenue / Total active customers.
Gross Margin = (Revenue - Cost of Goods Sold) / Revenue.
Churn Rate = The percentage of customers who leave per period.
Customer Lifetime = 1 / Annual Account Churn Rate, estimating how long a customer stays.
Example: If a company has:
ARPU = $50/month
Gross Margin = 80%
Churn Rate = 5% per month (0.05)
LTV = $50 x .80 / .05 = $800
CAC Payback Period
How many months it takes to recoup the cost of acquiring a customer.
CAC Payback Period = Customer Acquisition Costs / Average Monthly Revenue per Customer per Month x Gross Margin
Definitions:
CAC (Customer Acquisition Cost) = Sales & marketing spend per new customer… and rebates and referral fees
Average Revenue per Customer per Month (ARPU) = Monthly revenue per customer.
Gross Margin% = (Revenue - COGS) / Revenue
Example Calculation:
CAC = $300
ARPU = $50/month
Gross Margin = 80%
CAC Payback Period = $300 / $50 x .80 = 7.5 months
Source: Moneylion Q3 of 21 Earnings Presentation
Gross Profit per Active Account
Revenue per user after deducting transaction costs—a key profitability indicator at the user level.
Gross Profit per Active Account = Total Gross Profit / Total Active Accounts
Simplified Version: ARPU x Gross Margin
Definitions:
Total Gross Profit = Total revenue - Cost of Goods Sold (COGS).
Number of Active Accounts = Total users generating transactions in a given period.
ARPU (Average Revenue per User) = Revenue per customer per period.
Gross Margin = (Revenue - COGS) / Revenue.
Example Calculation:
Total Revenue = $1,000,000
COGS = $400,000
Active Accounts = 10,000
($1,000,000 - $400,000) = $600,000
Gross Profit per Active Account = $600,000 / 10,000 = $60 per user
Source: Block 2022 Investor Day Business Model Presentation
Transaction Margin Dollars
Revenue minus direct transaction costs at the per-transaction level (rather than per user).
A core scalability metric, showing how much revenue is retained after transaction costs.
Transaction Margin Dollars = Revenue per Transaction − Direct Transaction Costs
Definitions:
Revenue per Transaction = The amount earned per transaction.
Direct Transaction Costs = Costs directly tied to processing a transaction (e.g., payment processing fees, interchange fees, fraud losses).
Example Calculation:
Revenue per Transaction = $5.00
Direct Transaction Costs = $2.00
Transaction Margin Dollars = $5.00 - $2.00 = $3.00
Source: Affirm 2023 Investor Forum Presentation
Structural Margin
Measures how much of each additional revenue dollar turns into profit. Some examples:
Square offsets lower-margin hardware sales with high-margin products like Cash App and reinvests surplus into growth.
Structural Margin = Incremental Gross Profit / Incremental Revenue x 100
Source: Block 2022 Investor Day Business Model Presentation
Definitions:
Incremental Gross Profit = Additional gross profit generated when revenue increases.
Incremental Revenue = The increase in revenue over a given period.
Example Calculation:
Previous revenue: $10M → New revenue: $12M ($2M increase)
Previous gross profit: $4M → New gross profit: $5M ($1M increase)
Structural Margin = $1M / $2M x 100 = 50%
Result: 50% of new revenue turns into gross profit.
High Structural Margin → Strong operating leverage, meaning scaling drives profitability.
Low Structural Margin → Additional revenue isn't translating efficiently into profit, possibly due to high variable costs.
Revenue Mix by Product Line
What % of revenue comes from each product you offer
Are you a one trick pony? Or a true multi product platform?
Source: Bill 2024 Investor Day Presentation
Recurring Revenue Percentage
Tracks how much of your revenue is predictable (e.g., subscription-based income). This is crucial for understanding stability.
A company like bill.com has transaction based revenue, subscription based revenue, and revenue they make on float from cash they hold
The recurring portion is the subscription bit
Revenue per Employee
A simple but powerful metric that should increase over time as your company amortizes network costs.
The ultimate test of operating leverage: what output do you get from your means of production (employees)
4. Risk and Trust Metrics
These metrics gauge how well a platform manages risk. Fraud loss and chargeback rates aren’t just numbers—they’re survival indicators. If they rise unchecked, merchants and users churn, and profitability disappears.
To put that in perspective: If you’re take rate is ~2% and you have one transaction go wrong, you need 50 of the same sized transactions to just claw back to even.
Fraud Loss Rate
The percentage of revenue lost to fraud. High fraud = low trust. If this gets out of control, merchants will bail.
Fraud Loss Rate = (Total Fraud Losses / Total Revenue) x 100
Example Calculation:
Total Fraud Losses = $50,000
Total Revenue = $5,000,000
Many platforms aim for <0.5% fraud loss rate to maintain profitability and compliance.
Chargeback Rate
The percentage of disputed or reversed transactions. Too high? Could mean fraud exposure or unhappy customers.
Definitions:
Total Chargeback Transactions = The number of transactions that were disputed and reversed.
Total Transactions = The total number of transactions processed during the same period.
Example Calculation:
Total Chargeback Transactions = 500
Total Transactions = 100,000
Chargeback Rate = (500 / 100,000) x 100 = .5%
Many payment processors and card networks flag merchants with chargeback rates above 1%, leading to higher fees or penalties.
Customer Complaint Resolution Time
The average time to resolve customer complaints—a direct reflection of operational efficiency and trust.
5. Market Expansion Metrics
These metrics highlight growth potential and strategic opportunities as your business scales.
Source: Block 2022 Investor Day Business Model Presentation
Segment Penetration
Measures your reach within the total addressable market (TAM). High penetration = a strong foothold in your target segment.
Segment penetration = (Active Customers in Segment / Total Customers in Segment) x 100
If you serve 50,000 SMBs in a market with 500,000 potential SMBs, your segment penetration is 10%
This applies across different customer tiers:
SMB, Midmarket, Enterprise
Even pro-sumers or very small businesses (e.g., Shopify’s audience)
Geographic Expansion Rate
Tracks revenue or user growth in new regions or markets—a key indicator of global scalability.
Geographic Expansion Rate = (Revenue from New Markets (Current Period) - Revenue from New Markets (Previous Period) / (Revenue from New Markets (Previous Period)
Cohort Gross Profit
Breaks down profitability by customer cohort to assess lifetime value and operational efficiency.
Gross Profit = Revenue from Cohort - Cost of Goods Sold for Cohort
Cohorts should expand over time as you add new products and increase retention.
Source: Affirm 2023 Investor Forum Presentation
Measure What Matters
Fintech rewards those who “master the flow of money” but only if they navigate risk, regulation, and razor-thin early margins. The companies that scale best aren’t just processing transactions; they’re building trust, optimizing take rates, and turning engagement into durable profitability.
If you’re interested in the top metrics for Vertical SaaS businesses you can find it here.
