[janosch_123]

I didn't understand this section, why would they pay $73 for $75 and where do the $25 come from?

"Investor Economics: Assume a $100 BNPL loan. $25 is paid upfront by the Consumer, so an Investor pays $73 for a $75 loan, discounted for risk, fees, and return expectations. The Investor receives $75 from customer repayments over 6 weeks minus servicing fees of $0.25. A $1.75 profit on $73 investment over 6 weeks is a 2.4% return, or 22.8% annualized (52 weeks/6 weeks = 8.67 periods each year; annualized return = (1+0.024)8.67 - 1)."

[dustincoates]

For why the investor pays $73, it's right there in your quote:

> an Investor pays $73 for a $75 loan, discounted for risk, fees, and return expectations

The investor doesn't expect to get 100% of that $75 back on average.

The $25 is the first payment, which is made immediately.

[janosch_123]

Oh of course the investor buys $75 of debt for $73, I get it now.

I somehow had it in my head the other way around that he can borrow $75 for $73 which wouldn't make sense.

Thank you.