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Shabir JawahirCommercial strategy & analytics
Leading payment gateway01

Pricing and Profitability Strategy

Rebuilt transaction economics for a payment gateway and introduced pricing by currency and value tier. The work doubled margin on USD transactions against the documented baseline.

2.0x

Margin on USD transactions

  • Pricing
  • Profitability
  • Unit Economics

Context

Payment margins varied by currency and transaction value, but the blended view did not show which categories were profitable.

The problem

Without revenue, cost and contribution by transaction category, pricing decisions relied on an average that concealed underpriced segments.

Analysis

  1. 01Revenue, cost and contribution rebuilt at the level of one transaction rather than one month.
  2. 02The full book segmented by currency, value band and customer type to expose where the average was doing the hiding.
  3. 03Price sensitivity tested per segment to establish how much movement each would absorb before behaviour changed.
  4. 04Commercial risk of every proposed move quantified against the volume it put at stake.

Recommendation

Reprice by currency band and value tier, while holding rates in price-sensitive segments. Present the expected uplift and downside for each change so leadership can approve moves individually.

Example view

Illustrative presentation of the approach. Client data remains confidential.

Transaction Ledger

  • TXN-4471USD1,240.003.1%6.4%
  • TXN-4472LKR84,5002.8%2.9%
  • TXN-4473USD312.503.4%7.1%
  • TXN-4474GBP890.003.0%5.8%
  • TXN-4475LKR12,9002.6%2.7%
3.0%5.0%Blended margin

LKR volume holds its rate. The foreign currency book was the one carrying unpriced value.

Implementation

  • Segment level pricing model
  • Contribution margin view per transaction
  • Sensitivity table showing revenue at risk
  • Executive pack with staged rollout order

Outcome

Doubled margin on USD transactions. Measured against the documented pre-change baseline.

  • Margin visible per transaction category for the first time
  • Pricing moved from blended averages to segment economics
  • Underpriced categories identified with a quantified uplift each

What this demonstrates

  • Commercial analytics
  • Pricing strategy
  • Margin optimisation
  • Financial modelling

Next

Business Intelligence Operating System

Leading payment gateway

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