New Interest-Free Loan Service Underway by Safaricom’s MPESA

Safaricom is set to unveil a zero-interest credit service that will allow millions of its customers to shop for goods up to 100,000 shillings and pay later. The service which will be known as Faraja will be a move set to disrupt the mobile loans markets.

Faraja users will be able to buy goods and access services from as low as 20 shillings to a maximum of 100,000 shillings and pay the same amount without any extra fees or default penalty.

Unlike Lipa Later which is a similar service already in the market, this new credit service will allow customers to walk away with goods and services from a list of selected merchants without being required to pay upfront in installments.

The service will allow its users to have a credit limit of up to 100,000 shillings depending on their credit score to make purchases and then repay at a later date within the 30-day window offered.

Normal M-PESA transaction charges will apply at the point of sale on the product to be bankrolled by Equity Bank.

“You will only be required to repay the outstanding facility amounts advanced to you by us using the designated Paybill number or such other channels as provided by us from time to time,” said Safaricom in a statement on its website.

The service promises to change the game in the mobile loans sector and is set to undercut the costlier credit products including its own Fuliza, KCB-Mpesa, Mshwari and as well as digital credit providers such as Tala and Branch.

Safaricom and Equity are looking at making money from the surge in Lipa na Mpesa transactions at selected stores. Already dozens of outlets have signed up to merchants including Naivas Supermarket, Goodlife pharmacy and Citi walk.

Article by Sally Lizwa