For the second time in a week, Safaricom’s M-Pesa is in the news with one of its products, as the Kenyan mobile money service launches an interest-free loan service for buying goods.
Users of the interest-free product, which will be called Faraja, will buy goods and services costing from as little as Sh20 (US$0.17) up to a maximum of Sh100,000 (US$846.83) and pay back the amount without any extra fees. Nor will they being required to pay upfront in instalments. Only the normal M-Pesa transaction charges will apply at the point of sale on the product, which is to be bankrolled by Equity Bank.
Each user will have a credit limit of up to Sh100,000, depending on their credit score. They will need to repay within a 30-day window.
The Faraja product is owned by Edomx Ltd, a Kenya-based fintech firm. Its website uses the slogan “Faraja: Zero ni zero (zero is zero)”. The parties involved will apply a revenue-sharing formula. This is a move, the Business Daily new service suggests, that is set to disrupt the growing mobile loans market.
And it’s not the only disruptive move from M-Pesa lately. Yesterday we reported that the M-Pesa virtual Visa card, introduced in June, is now undercutting Kenya’s commercial banks in the foreign exchange market.
It's worth pointing out, however, that Safaricom enjoys a dominance in mobile money unusual in pretty much any country.
Business Daily reported in March that Safaricom had grown its control of the mobile money market to 99.9 percent, amid efforts by regulators to open its M-Pesa platform to interface with those from rival Airtel Kenya and Telkom Kenya in a bid to enhance competition in the sector.