Revenue share deals are great in fintech

Last week, I made a few small but important shifts. Updated my LinkedIn profile to be more direct about what I do.

Started seeing inbound leads that were far more aligned. Finally recorded the first episode of my podcast - something I’d put off for months.

None of this was revolutionary. But it was movement. Forward motion. The kind that adds up when done consistently.

And that’s the thing: In business - especially fintech - small changes can protect you from big damage.

Here’s one change most fintech founders forget until it’s too late:

Revenue Share Sounds Cool Until It Doesn’t

A while ago, I was reviewing a partnership contract between a fintech startup and a payments aggregator. The terms looked simple on the surface:

“We’ll help you get users. In return, you give us 20% of revenue.”

It felt like a win-win. The aggregator had reach. The startup had a great product. The user base started growing fast.

And initially? It worked. Thousands of merchants onboarded. Transactions shot up

Dashboards looked amazing But a few months in, the cracks began to show.

The Hidden Costs Nobody Talks About

Revenue looked like ₹10 lakhs per month. But in reality? ₹2 lakhs gone to refunds. ₹1 lakh eaten by chargebacks. ₹50k in reversals and fraud. ₹1.5 lakhs in gateway and processing fees

What was left? Closer to ₹5 lakhs of usable, actual cash. But the aggregator still demanded ₹2 lakhs (20% of the original ₹10 lakhs).

Why? Because the contract said:

“Aggregator receives 20% of revenue on all transactions.”

That was it. No definitions. No exclusions. No timeline. Just a vague one-liner that ended up costing the startup far more than expected.

When Terms Are Vague, Assumptions Take Over

Here’s what that one sentence failed to cover: What counts as “revenue”? Are refunded or disputed transactions excluded?

Is the share calculated before or after fees? What happens when fraud hits?

These things are day-to-day realities in fintech. And when they’re not spelled out clearly, partners will default to their version of what’s “fair.”

Which usually means: you pay more.

Here’s How I Recommend Fixing This

If you’re entering into a revenue share or performance-based partnership, your contract needs to include four key elements:

1. Define “Revenue” Upfront

Is it gross revenue before fees? Is it net revenue after gateway deductions? Is it collected cash or billed value?

Be specific. Use numbers and examples if needed.

2. Be Clear On Exclusions

Make sure the contract excludes the following from rev-share:

• Refunds

• Chargebacks

• Failed settlements

• Cancelled subscriptions

• Taxes collected on behalf of the government

This ensures you’re not sharing income you never actually received.

3. Add a Clawback Clause

Something like:

“Partner’s share will be adjusted retroactively for refunded, reversed, or failed transactions. If payouts have already been made, the amounts will be adjusted against future payments.”

This gives you breathing room when payments don’t stick.

4. Use a Realistic Settlement Timeline

“Revenue share will be paid 30 days after the end of each calendar month, post fraud and chargeback windows.”

This gives you enough time to assess real, net revenue - after the dust settles.

TL;DR - Vague Revenue Clauses Can Cost You

Here's a quick list of everything that I shared, so you don't forget it!

• Don’t agree to revenue share without defining revenue

• Exclude anything that doesn’t result in real cash

• Use clawbacks to stay protected from future reversals

• Push payouts to after the fraud/chargeback window

Final Thought: Always Ask - “A Share of What, Exactly?”

Revenue-share partnerships are powerful. They help you scale fast.

They align incentives. They make growth feel like a team sport.

But they’re also slippery.

If your contract isn’t rock-solid, you could be handing over more than you intended - month after month.

So the next time someone asks for a percentage of your revenue, pause and ask: “A percentage of what, exactly?”

If your contract doesn’t answer that in painful detail, go fix it before the growth starts. Because that’s when the problems start showing up too.