Part 9 · 2 chapters · ~12 min

Business Models, Unit Economics and Fintech Economics

How products make money (subscriptions, transaction fees and take rates, interest margins, interchange, float), unit economics and contribution margin, CAC, LTV and payback, cohort revenue, and the economics of payments, lending and wallets in emerging markets.

Unit economics

Every feature decision eventually meets these numbers. An engineer who can read them can argue for the projects that matter.

UNIT ECONOMICS OF A SMALL LOAN

a ₦100,000, 30-day loan, illustrative numbers in naira

swipe the figure sideways, or tap expand for full screen

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revenue

Interest and fees on a ₦100,000 loan for 30 days: say ₦12,000 (rates are set within regulation and disclosed).

₦12,000 earnedillustrative, not a real price

Fintech business models

model	revenue from	what drives it
payments / transfers	per-transaction fees, take rate on merchant volume	volume, pricing power, rail costs
lending	interest and fees minus cost of funds and losses	risk models, collections, cost of capital
cards	interchange (a share of each card payment), FX markups	card spend volume
wallets and deposits	interest earned on float held at banks	balances held, interest rates
B2B infrastructure	API fees, subscriptions, revenue share	customer volume, switching costs

code

CAC     customer acquisition cost = marketing + sales spend ÷ new active customers
LTV     lifetime value ≈ contribution per customer per month × expected months retained
payback months until contribution repays CAC; healthy consumer fintechs aim for well under a year
LTV/CAC above ~3 is a common rule of thumb for sustainable growth