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Key Takeaways
- Payroll is the dominant fixed cost, starting at $52,083 per month for 55 FTE staff, significantly exceeding the $14,300 base overhead.
- The financial model projects the Payment Gateway will reach its operational break-even point eight months after launch, specifically in August 2026.
- Transaction Processing and Bank Fees constitute the largest variable cost, consuming 100% of revenue, while Cloud Infrastructure costs account for an additional 25% of revenue.
- To sustain operations until profitability, a minimum working capital requirement of $200,000 is necessary to cover the projected Year 1 negative EBITDA of -$145,000.
Running Cost 1 : Transaction Processing & Bank Fees
Transaction Cost Exposure
Your transaction processing cost, covering interchange and network fees, hits 100% of total revenue by 2026, meaning zero gross margin on processing volume alone. This requires absolute, daily tracking to manage cash flow risk immediately.
Cost Inputs Needed
This expense category includes the base interchange fees paid to card issuers and the network assessment fees charged by entities like Visa or Mastercard. You must calculate this daily using Total Payment Volume (TPV) multiplied by the blended cost rate. If costs are 100% of revenue in 2026, your take rate must cover overhead, not just processing.
Managing Processing Rates
Given the 100% exposure in 2026, you must aggressively optimize your cost structure now. Focus on achieving the lowest possible interchange pass-through rates from your acquiring bank partners. If you use third-party processors, verify their markup structure; often, small errors here compound quickly across millions in volume.
Daily Monitoring Imperative
If transaction costs equal 100% of revenue in 2026, any operational error or unexpected volume spike in interchange costs will immediately create a cash deficit. This metric demands real-time dashboard visibility, not monthly reconciliation. That’s a defintely painful way to run a business.
Running Cost 2 : Cloud Infrastructure Costs
Infrastructure Burn Rate
Your platform scaling costs are high. Expect cloud hosting, storage, and processing to consume 25% of gross revenue by 2026. This cost grows directly with transaction volume, so managing unit economics early is critical for profitability. That’s a big chunk.
Cost Drivers
This 25% covers core platform hosting, databases for storing transaction records, and scaling compute resources for real-time payment authorization. You need projected 2026 revenue figures and quotes from cloud providers like Amazon Web Services (AWS) or Microsoft Azure to model this accurately. It scales with every new merchant.
- Data storage volume (Terabytes).
- API call volume (per second).
- Required uptime guarantees (SLA).
Scaling Smartly
Avoid over-provisioning infrastructure before volume justifies it. Many startups waste money on reserved instances too soon. Focus on serverless architecture initially to pay only for actual usage spikes. If onboarding takes 14+ days, churn risk rises defintely due to slow setup.
- Negotiate volume discounts early.
- Audit usage quarterly for waste.
- Use spot instances where possible.
Watch the Ratio
Since Transaction Processing Fees are 100% of revenue, this 25% infrastructure cost means that 75% of your revenue is already consumed by core operational costs before payroll or rent hits. Your margin relies entirely on subscription and advertising revenue streams.
Running Cost 3 : Core Team Payroll
Fixed Payroll Start
Your fixed payroll commitment for 55 full-time employees (FTE) begins at $52,083 monthly starting in 2026. This covers essential technical and leadership roles, including your CEO, CTO, and core engineering team.
Payroll Inputs
This $52,083 monthly figure represents fixed overhead for 55 FTEs in 2026. To calculate this, you need agreed-upon salary bands for key roles like the CEO, CTO, and engineers, plus employer taxes and benefits overhead, typically 25% to 35% above base salary. This is a non-negotiable fixed operating expense.
Headcount Control
Controlling this large fixed cost means scrutinizing headcount projections closely. If you hire too fast, you burn cash before transaction revenue scales up. Consider using contractors for specialized, short-term engineering needs instead of immediate FTE hires. Slowing the hiring ramp by just three months can save over $150,000 in initial payroll burn. This is defintely critical for runway planning.
Runway Impact
Since this payroll is fixed overhead, it directly impacts your runway; if revenue dips, this cost doesn't adjust down automatically. You must ensure your hiring plan aligns perfectly with projected funding milestones and the time needed to onboard high-value roles like the CTO.
Running Cost 4 : Office Rent
Fixed Rent Budget
You need to budget $5,000 monthly for physical office space. This is a fixed operating expense that doesn't change even if your transaction volume spikes or drops next month. It must be covered before variable costs are accounted for.
Estimating Office Need
This $5,000 covers the lease obligation for your physical location, supporting the 55 FTE staff payroll of $52,083 monthly. Since this cost is fixed, it hits your bottom line whether you process zero transactions or millions. You must secure quotes for a space accommodating your team size.
- Fixed cost, unrelated to revenue.
- Supports 55 employees.
- Budgeted at $5,000 monthly.
Managing Lease Risk
Avoid signing a five-year lease immediately if you aren't sure about headcount growth. Negotiate shorter initial terms, maybe 18 months, to keep flexibility. A common mistake is locking in too much square footage before revenue stabilizes. Honesty, space is secondary to payroll right now.
- Seek shorter initial lease terms.
- Don't overcommit on square footage.
- Review renewal clauses closely.
Fixed Cost Drag
When revenue is low, fixed costs like this rent become a major hurdle. If transaction volume is slow, $5,000 in rent is a much larger percentage of your contribution margin than when you are scaling rapidly. That's a defintely important thing to remember.
Running Cost 5 : Legal & Compliance Fees
Mandatory Compliance Budget
You must budget $3,000 monthly for essential legal and compliance overhead specific to handling payments in the US market. This covers mandatory regulatory filings and maintaining the security standards required to operate legally as a payment processor.
Cost Coverage Details
This $3,000 monthly expense is fixed and non-negotiable for a platform processing transactions. It funds required state and federal regulatory filings and licensing fees. Crucially, it covers the ongoing cost of adhering to Payment Card Industry Data Security Standard (PCI DSS) requirements for data protection.
- Covers regulatory filings.
- Funds necessary licenses.
- Maintains PCI DSS adherence.
Managing Compliance Spend
Keeping this cost controlled means bundling services where possible, so don't pay separate legal retainers for every small filing. Use specialized compliance firms offering flat-rate monthly retainers covering routine work. Audit preparation is where costs spike, so streamline your documentation defintely.
- Use flat-rate compliance retainers.
- Bundle vendor services early.
- Prepare audit documentation proactively.
Operational Risk
Failure to maintain PCI DSS adherence, which this budget supports, results in immediate suspension of payment processing capabilities and massive potential fines. This is not a discretionary cost; it directly impacts your ability to recognize revenue starting day one.
Running Cost 6 : Operational Software Licenses
Software Cost Structure
Your operational software stack has a fixed base of $1,500 monthly, but the dominant factor is the variable Sales and Marketing (S&M) expense, which scales directly with revenue at 35%. This cost structure means profitability hinges on maintaining high gross margins after transaction processing fees.
Inputs for Costing
This category covers necessary licenses for operational support, fixed at $1,500 per month. The crucial variable input is your projected revenue because Sales and Marketing is budgeted at 35% of that total. You must model this variable spend against your growth targets to see the true operating leverage.
- Fixed license fees ($1,500)
- Projected monthly revenue
- S&M rate (35%)
Managing S&M Spend
Controlling the 35% variable S&M cost requires rigorous tracking of Customer Acquisition Cost (CAC) versus Customer Lifetime Value (LTV). Avoid locking into multi-year contracts for new marketing platforms until you have proven unit economics; defintely review all subscriptions quarterly.
- Audit tools every six months
- Prioritize usage-based pricing models
- Tie S&M spend to measurable ROI
Margin Pressure Point
Since S&M consumes 35% of revenue, it severely compresses the margin available to cover other fixed costs like payroll ($52,083/month) and compliance ($3,000/month). This high variable cost means scaling revenue without improving conversion efficiency will only increase losses.
Running Cost 7 : Security Audits & Certifications
Mandatory Compliance Budget
You must budget $1,000 monthly for required security audits and maintaining necessary financial certifications. This cost is fixed and non-negotiable for a payment platform handling customer funds in the US market. Compliance failure stops growth immediately.
Audit Cost Drivers
This $1,000 covers annual external security reviews and maintaining required financial attestations. For a payment gateway, the main driver is adherence to Payment Card Industry Data Security Standard (PCI DSS). You need quotes from certified third-party assessors to set this baseline, defintely treating it as fixed overhead.
- Annual QSA assessment fees.
- Certification maintenance fees.
- Documentation overhead costs.
Controlling Audit Spend
Don't treat this as a lump sum; manage the audit schedule carefully to avoid premium pricing. Standardize your compliance documentation now to reduce assessor time significantly. A common mistake is waiting until the last minute, which forces costly, rushed reviews. Keep internal controls tight to prevent scope creep.
- Schedule audits proactively.
- Standardize documentation early.
- Avoid scope creep penalties.
Operational Insurance
Treat this $1,000 monthly allocation as operational insurance, not discretionary spend. If your Legal & Compliance Fees are $3,000 monthly, this audit budget is the critical component ensuring operational continuity for transaction processing. Compliance risk is existential for payment processors.
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Frequently Asked Questions
Total fixed costs start at $14,300 monthly, plus $52,083 in initial payroll, before accounting for variable transaction costs (100% of revenue);