7. Volume-Linked Capacity Fee

The Volume-Linked Capacity Fee is the primary economic mechanism through which an operator pays for external payout capacity. The fee is designed to follow covered activity rather than behave like fixed debt service.

This distinction is important. A fixed coupon forces the operator to pay regardless of whether volume materializes. A volume-linked capacity fee rises when the covered portfolio generates more activity and falls when covered activity is lower. The operator therefore pays for capacity in relation to actual use of the covered facility.

Economic alignment

If the covered portfolio grows, the operator pays more because the facility is supporting more volume and the operator is generating more operating activity. If covered volume underperforms, the fee burden does not behave like a fixed obligation detached from the business. This can make the structure more acceptable for operators with fluctuating volume and non-linear variance exposure.

From the market participant's perspective, the fee stream becomes expected carry. The expected carry can change as covered volume projections change. Higher projected activity may increase expected carry, while lower activity may reduce it. This makes the facility dynamic: the same buffer can have a different reference value depending on expected future fee generation.

Not debt service, not profit sharing

The capacity fee should not be described as a loan repayment or profit-sharing distribution. It is a facility fee linked to covered activity. The operator is paying for access to external payout capacity, not selling equity, borrowing under a conventional loan, or sharing global business profits.

The relevant economic question for the operator is not the nominal yield received by market participants. It is the cost of capacity relative to covered activity and GGR economics. A fee that looks small to traders may still be meaningful for an operator if the underlying margin is low. This is why the fee methodology must be designed from the operator's cashflow reality, not from a desired trader yield.

The structure becomes more attractive when the operator sees the fee as the cost of accessing external capacity that may free internal capital and support growth, rather than as an additional fixed financing burden.