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Size a checkout improvement for an Indian merchant

Measure payment funnel economics · Fictional case

The situation

Of 20,000 attempts, 80% are approved and 90% of approvals settle. A change lifts approval to 85% while settlement stays at 90%. Each incremental settlement contributes ₹40 before fraud costs.

Your task

What is the incremental contribution before fraud?

Reveal step-by-step solution

  1. Set up the problem

    Baseline settled = 20,000 × 0.80 × 0.90 = 14,400.

  2. Work through the numbers

    New settled = 20,000 × 0.85 × 0.90 = 15,300, an increase of 900.

  3. Interpret the result

    Gross incremental contribution is 900 × ₹40 = ₹36,000. Compare this with incremental fraud and chargeback costs.

What to remember

Multiply conditional rates on the same cohort and evaluate net economics after risk costs.

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