Online lender set to provide pay-as-you-go



When online lenders such as Fairmoney, Quick Check and other online loan application sites came along a few years ago, many Nigerians were happy to finally be able to access loans within 30 minutes to respond to their needs.

In fact, the new online lenders have proven useful as many Nigerians in need of quick loans can now access the loans without much trouble unlike the hassle and possible rejection of their applications and stringent requirements imposed on them by banks. conventional trade.

In recent years, the Nigerian fintech space has been making waves, expanding exponentially, at the same time attracting the attention of foreign and local investors and attracting new entrants into the various sub-sectors of the ecosystem.

A good number of them such as Fairmoney, Renmoney and others have managed to offer unsecured loan facilities to Nigerians but at eye-popping interest rates.

On this point of interest rates, it would seem that some have met and agreed to crack down on defaulters, resorting to incredibly desperate measures to recover the loan facilities obtained from their applications.

Findings from Business Hallmark revealed that a large number of lending app operators are now sending embarrassing short message services (SMS) and WhatsApp messages to close contacts of their defaulting lenders with the intention of doing shaming defaulters, labeling them with terms like ‘criminal’, ‘fraudster’ and ‘terrible debtor’, among others.

In some cases, the full names, phone numbers and photos of alleged defaulters are shared with their contacts such as religious leaders, members of churches and mosques, close friends, bosses, colleagues and members of the community. family.

But the National Information and Technology Development Agency (NITDA) has called the debt collection strategy adopted by some of these fintechs a breach of data sharing.
BusinessHallmark’s investigations showed the agency did not support such “ambush debt collection tactics” and pointed out that no fintech company is allowed to share customer data without due process.

This was announced in a press release last year by NITDA spokesperson Hadiza Umah.
To curb the trend, NITDA imposed a 10 million naira sanction on an online lending platform, Soko Lending Company Limited (Sokoloan), for data privacy breach.

According to NITDA, it has received a series of complaints against the company, including “unauthorized disclosures, breaches of customer privacy protections, and defamation.”

Considering the fact that majority of these online lenders charge high interest rates and expect their loan recipients to repay in the shortest possible time, around seven days or 14 days, the maximum term is a month, many eager to access loans for one reason or the other are now hesitant to approach online lenders.
Adegoke Sanmi, a mechanic said, “I won’t come back to them for a loan again. I approached one of them last year for a 10,000 naira loan to be repaid in seven days. On that date, while I was trying frantically to repay the loans, I started getting calls from people in my contacts saying that an online lender was texting them that I am a chronic debtor and a criminal .

Many people who have fallen victim to such a crude debt collection tactic have told this outlet that they prefer to join contribution groups instead of these online lenders.

Given the unhealthy experiences of Nigerians at the hands of online lenders, the arrival of a Nigerian startup, Earnipay, which raised $4 million to provide on-demand pay to workers would be a refreshing new dawn. But only employees can benefit from it.

Earnipay is a fintech solution that gives on-demand wage access to employees, announced last Friday that it has landed a $14 million seed deal to expand its operation in Africa.

It was Maria Adediran, Earnipay’s accounts manager, who made the disclosure, in a statement to the media, seen by BusinessHallmark.
Founded in 2021 by Nonso Onwuzulike, Earnipay officially launched operations in January with less fanfare.

At the launch, the fintech company said its goal was to improve the financial well-being of employees by partnering with employers and seamlessly integrating with their payroll systems to offer its services to employees, who can then track and withdraw their accrued wages through the app on any day of the month.

“At the end of the month, the employer deducts the withdrawn amount from the employee’s salary, reimburses Earnipay with it, and then pays the employee the balance as salary for that month,” the company said.

“Earnipay charges employees a nominal processing fee of N250 or N500 for this access. There are no refunds or interest charges because employees have access to what they worked for, it is their money,” the statement read.

According to Earnipay, the funding round was led by Canaan, with participation from XYZ Ventures, Village Global, Musha Ventures, Ventures Platform, Voltron Capital and Paystack.

According to the company, with the seed funding, Earnipay will accelerate the development of its technology platform to serve large enterprise employers. In doing so, Earnipay will provide employees with the tools they need to make better financial decisions and improve their quality of life.

The company says it will offer its on-demand pay solution to 200,000 employees by the end of 2022.

Speaking on the funding cycle, CEO Nonso Onwuzulike said, “Financial worries are the number one cause of distractions in the workplace. The monthly pay cycle means employees are often unable to pay day-to-day expenses, cover emergencies, or take advantage of immediate financial opportunities.

“As a result, they are exposed to predatory payday loans and get stuck in endless cycles of debt with unrealistic repayment periods and high interest rates.

“Earnipay exists to solve this problem and provide an ethical alternative to instant access to pay while helping employers improve employee engagement and retention at zero cost to their business.

“The future of pay is on-demand, and we are thrilled to be pioneering this incredible solution in Africa. I am thrilled to partner with a group of highly respected investors who understand the need for a platform such as Earnipay to improve access to wages and, above all, to improve the financial well-being of employees in Africa,” says Mr. Onwuzulike.


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