XTXFX Business Plan — Products and Pricing
The loan products, terms and pricing within statutory caps, and why pricing is a constrained variable rather than a lever.
Products and Pricing
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. Market Context and Opportunity
- 3. Regulatory Framework and NCR Registration
- 4. Products and Pricing
- 5. SWOT and Competitive Position
- 6. Credit Policy and Risk Management
- 7. Technology and Operations
- 8. Go-to-Market
- 9. Governance and Team
- 10. Financial Plan
- 11. Funding Structure and Capital
- 12. Break-Even and Credit Sensitivity
- 13. Sensitivity and Scenario Analysis
- 14. Risk Management
- 15. Implementation Roadmap
- 16. Investor Returns and Exit
- 17. Key Performance Indicators
- 18. Key Assumptions
- 19. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Unit Economics and Volume Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: NCR Registration Checklist
- E. Appendix E: Risk Register
- F. Appendix F: Glossary
- 4.1 XTXFX Flex — short-term credit transaction
- 4.2 XTXFX Term — unsecured credit transaction
- 4.3 Why the two products exist as a pair
XTXFX operates two regulated products, deliberately structured to occupy different categories under the National Credit Act. The first is an entry product that establishes repayment behaviour; the second is where the economics of the business are made.
4.1 XTXFX Flex — short-term credit transaction
|
Parameter |
Value |
|---|---|
|
Principal range |
R500 to R8 000 over one to six months, within the short-term credit transaction definition |
|
Average modelled loan |
R3 500 over 4 months |
|
Interest |
Blended 4.5% a month within the 5% and 3% prescribed limits — R394 per loan |
|
Initiation fee |
R415 — the prescribed R165 plus 10% of the amount above R1 000 |
|
Service fees |
R240 — R60 a month over 4 months |
|
Total lifetime revenue |
R1 049, or 30.0% of principal |
|
Modelled write-off |
13.0% of principal at scorecard maturity, against 17.6% in the first vintage |
|
Strategic purpose |
The acquisition product. Priced to be profitable in its own right, but its function is to generate proprietary repayment data on customers with thin bureau files at a loss exposure the business can absorb |
4.2 XTXFX Term — unsecured credit transaction
|
Parameter |
Value |
|---|---|
|
Principal range |
R8 000 to R50 000 over six to twenty-four months |
|
Average modelled loan |
R18 000 over 15 months |
|
Interest |
R2 846 per loan at 23.0% a year on a reducing balance, against a regulated ceiling of 24.85% |
|
Initiation fee |
R1 050 — the prescribed cap, reached on any principal above R9 850 |
|
Service fees |
R900 — R60 a month over 15 months |
|
Credit life commission |
R243 per loan, intermediated at the regulated maximum |
|
Total lifetime revenue |
R5 039, or 28.0% of principal |
|
Modelled write-off |
10.5% of principal, reflecting the selection advantage of lending to known payers |
|
Strategic purpose |
The profit engine. Access is graduated — the majority of Term customers are Flex graduates with demonstrated repayment behaviour on XTXFX’s own book, which is the single most predictive variable available to any lender |
Contribution of R1 663 per loan after credit losses, direct cost to serve, customer acquisition and the cost of funding the outstanding balance, approximately 9.2 per cent of principal over the fifteen-month life. Fixed overhead, depreciation and tax are met out of this contribution.
Prescribed fee income, initiation and monthly service fees, represents approximately 50 per cent of total revenue at Year 5. That is characteristic of NCA-regulated lending, and it is why the nominal freeze in prescribed fee amounts since May 2016 is a material strategic risk rather than a technicality. Regulation 45 requires the NCR to review the rates and fees at least every three years; reviews have been conducted since 2015 without the amounts being changed.
4.3 Why the two products exist as a pair
|
Question |
Flex answers |
Term answers |
|---|---|---|
|
What is the customer’s file at application? |
Thin or absent bureau history; the applicant a bank declines for want of data |
A twelve-month repayment record on XTXFX’s own book |
|
What is the loss exposure of a mistake? |
R3 500 of principal at 13.0% write-off — R455 expected |
R18 000 at 10.5% — R1 890 expected, four times the exposure |
|
What does the loan generate beyond revenue? |
Four months of observed instalment behaviour on a customer nobody else has data on |
Revenue. The data was already generated by Flex |
|
What is the acquisition cost? |
R380 blended, falling as referral and employer channels scale |
Near zero. The customer is already known |
|
What is the contribution per loan? |
Modest in absolute terms |
R1 663 after losses, cost to serve, acquisition and funding |
The pairing is the whole strategy. A lender that writes only Term loans must underwrite strangers at R18 000 of exposure on bureau data alone, which is precisely the assessment the banks already perform better with cheaper funding. A lender that writes only Flex loans generates data it never monetises. Running both, with graduation between them, means the expensive credit decision is made on the cheapest possible information, the customer’s own repayment history, and the cheap credit decision generates that information at an exposure the business can absorb.