Gross Payment Volume
Gross payment volume is the total value of transactions a payments company processes in a period — every card, wallet and transfer that passes through its systems, before fees — and it is the number the industry leads with: Stripe's trillion, Adyen's billions, a facilitator's "$50bn GPV". It is a measure of scale and reach, not of revenue: the company keeps a take rate on it, and a buyer values the take rate's durability, not the volume's size.
- Also known as
- GPV, Total payment volume, TPV, Processed volume
- Used at
- payments companies' reporting and fundraising, the denominator of the take rate, growth comparisons, and scheme fee and pricing tiers (which step with volume)
- Binding
- no — a reported metric with definitions that vary: some count only volume the company is merchant of record for, some count gateway-only volume, some count both sides of a marketplace transaction; diligence asks which
- Typical take rates on GPV
- 0.2–0.6% net for a large PSP or facilitator; 1–3% gross before interchange for small-merchant providers; a marketplace's "take rate" on GPV is a commission and a different thing
- Typical trap
- GPV growing fast while the take rate falls, because the growth is in large low-margin merchants; or GPV counted twice in a platform's own reports
- Parties
- the payments company, its investors and acquirers, and the analysts who divide revenue by it
How gross payment volume works in practice
A payment facilitator processes $50bn a year for its platforms' sub-merchants. Its gross revenue is what it charges them — say 2.5% blended, $1.25bn — and its net revenue is that less the interchange, scheme fees and processing costs it pays — $300m, a 0.6% net take rate. The $50bn is the headline; the $300m is the business; the 0.6% is the question every investor asks about — is it rising or falling, and why. GPV grows when the company adds merchants or its merchants grow; the take rate falls when the new merchants are larger and better priced, and rises when the company sells more services on the same volume.
The definitions matter more than they should. A gateway that processes $20bn of authorisations for merchants who have their own acquirers counts $20bn of volume and earns cents per transaction on it; a facilitator that is merchant of record for $5bn earns a percentage of every dollar. A marketplace that reports the value of goods sold as GPV and its commission as take rate is describing a different business. Diligence on a payments company rebuilds GPV from the settlement files — merchant of record, gateway-only, on-us — and recomputes the take rate on each.
For a founder the metric is a vanity number until it is decomposed; for a buyer it is the first thing to decompose.
Example
A payments company raises on "$8bn GPV, growing 60%". Diligence: $4.5bn is merchant-of-record volume at a 0.55% net take rate ($25m); $3bn is gateway-only volume from two large merchants at $0.03 per transaction ($1.8m); $0.5bn is intra-platform transfers counted at both ends. Net revenue: $27m on a real economic volume of $7.5bn — 0.36% blended, and falling, because the 60% growth came from the gateway-only merchants. The buyer's model separates the two businesses, values the merchant-of-record book at 12× net revenue and the gateway volume at a multiple of its per-transaction fee, and arrives at $340m against the $600m the "$8bn" had implied. The founders' next deck leads with net revenue.
Common mistakes
- Valuing a payments company on GPV. - Counting gateway volume, merchant-of-record volume and double-counted transfers as one number. - Growing GPV by adding large merchants at prices that lower the take rate below the cost to serve. - Comparing GPV across companies with different definitions. - Founders reporting a GPV growth rate that outruns the revenue growth rate and not explaining why.