Payments Economics 3 min read
Understanding PSP Contracts: What Merchants Never Read But Should
A breakdown of the clauses in payment service provider contracts that quietly drain merchant margins — and what to negotiate before you sign.
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Payments Economics
The headline MDR is the starting point, not the full picture. Interchange, scheme fees, acquirer margin, FX spread, rolling reserves, and settlement timing together determine the actual cost of payment acceptance. Operators who can decompose a processing statement and identify what is negotiable versus fixed are the ones who build sustainable acceptance economics.
Pricing Structure
Decomposing the MDR — interchange, scheme fees, acquirer margin, FX spread, rolling reserves, settlement timing. What is negotiable, what is fixed, and where the obscure line items hide.
Margin Compression
Real-time rails at zero MDR, interchange caps tightening, scheme fees rising, and acquirer margins squeezed from both ends. The structural forces reshaping who profits from acceptance.
Take-Rate Trade-offs
Who absorbs fraud, who pays for disputes, what the MoR premium actually buys, and how take-rate trade-offs cascade into vendor selection, contract structure, and operating margin.
The operator question Where does each cent of your MDR actually go — and what would it take to keep more of it?
4 briefings in this topic
Payments Economics 7 min read
Why Cross-Border B2B Payments Are Still Broken (And What's Actually Fixing Them)
Correspondent banking chains, opaque FX markups, and two-day settlement lags persist in B2B cross-border payments despite fintech's decade-long assault on the problem.
Payments Economics 7 min read
PSP Negotiation Playbook: Getting Better Rates After Year One
Most merchants accept PSP pricing as fixed after signing. It isn't. Here's the leverage you have after year one, when to use it, and what to actually negotiate — from interchange-plus structure to reserve release to SLA penalties.
Payments Economics 9 min read
Klarna's IPO and the BNPL Unit Economics Problem
Klarna's S-1 reveals a business that's grown into profitability but carries structurally thin margins, credit loss sensitivity, and a regulatory headwind that hasn't fully materialized. A breakdown of BNPL unit economics and what the IPO filing tells us about the model.