2.24% Bad Debt. How do you calculate?, page-30

Bad debts are sunk money with no chance of recovery and that's a problem for any company. Let's look at the facts.
1) All BNPL companies work on 4% commission from merchants, Their another source of income is fee on unpaid accounts.
2) They must be either borrowing at certain interest rate or using share holders' money to pay the merchants. Any bad debt will dilute the equity.
3) They have expenses in the form of sales and marketing, and also admin expenses to maintain staff and offices.

So we need to be careful regarding bad debts.