Ann: Zip hits the bullseye with Target, page-13

below is my calculation of the receivable amount Z1P needs before actually can make money:

funding cost = 5.5% interest
bad debt = 2.5%
Less: merchants average pay 3.5% commission
net funding cost = 4.5% needs to be recovered from consumer

breakeven receivable = $AAA, each consumer has 1000 line of credit, no of customer = AAA/1000, revenue from each customer = AAA/1000*$6*12.

For AAA/1000*6*12 > AAA*4.5%+35m corporate cost, $AAA or receivable needs to be well over $1bil.

if Z1P increase merchant fee by 1%, and consumer monthly fee by $2, $AAA = 500mil.

so it is inevitable, what Z1P will do is to aggressively acquire consumers, and hit them in the end like banks do, hahaha