Safaricom has unveiled a zero-interest credit service that will allow millions of its customers to shop for goods up to Ksh100,000 (approximately $846) and pay later in a move that is set to disrupt the mobile loans market.
Users of the interest-free product, to be known as Faraja, will buy goods and services from as low as Ksh20 ($0.17) to a maximum of Ksh100,000 ($846) and pay the same amount without any extra fees witnessed on other credit products.
However, only the normal M-Pesa transaction charges will apply at the point of sale on the product to be bankrolled by Equity Bank.
Faraja is slightly similar to the Lipa Later service currently in the market, only that this time, shoppers will walk away with the goods from a list of selected merchants without being required to pay upfront in instalments.
It will work like a digital credit card where a user will have a credit limit of up to Ksh100,000 ($846), depending on their credit score, to make purchases against and then repay at a later date within the 30-day window.
“You will only be required to repay the outstanding facility amount as advanced to you by us (in whole or in part) using the designated Paybill number or such other channels as provided by us from time to time,” Safaricom says in a statement on its Website.
Faraja promises to be a game-changer in the mobile loans market and is set to undercut the costlier credit products including its own Fuliza, KCB-Mpesa, Mshwari as well as digital credit providers such as Tala, Branch and Zenka.