What are the economics of bike sharing companies? Bike sharing seems to have originated in China.

And it has spread to the UK. 

And at least a decade on it continues to spread into the provinces. 

So it has longevity.

So what are the economics of this industry?

At first glance it would appear to be a horrible model: lots of liability, lots of maintenance, lots of criminality and endless opportunity for annoyance through dumped bikes causing inconvenience.

So what is the economic model of bike sharing?
Interest is their profitability mechanism. Pretty much everything else is a cost.

Let's make an example:


I start a bike share business.
I buy 100 bikes. Costs me \$10K.
I make the fee of using the bikes so cheap, lots and lots of people have no problem using them as its so cheap.


Here is the catch: To cover my liability (lost bikes, stolen, wrecked, etc.) there is a  one time fee (before you can use any of my bikes) that is a 100% REFUNDABLE security deposit of \$50 (you get your \$50 back whenever you want, so it's still cheap for you).

Everyone's \$50 adds up to quite a lot of money just sitting earning no money. But I want to make money. So what do I do? I invest it in super safe short/medium term bonds or whatever I want at a low/decent interest rate and collect my profit.