Safaricom has unveiled a zero-interest credit service that will allow millions of its customers to shop for goods up to Sh100,000 and pay later in a move that is set to disrupt the mobile loans market.
The new credit service will allow millions of Safaricom M-Pesa customers to shop for goods and pay up later.
The facility has been dubbed Faraja. Using Faraja, customers will purchase products from Sh. 20 to Sh. 100,000.
They will then be required to pay back within a month at no extra charges, hidden fees or default penalties.
Safaricom explains that when using Faraja loans, only the normal M-Pesa transaction charges will apply at the point of sale on the product.
This new credit product from Safaricom is set to disrupt local lending where loan products have costs and hidden fees attached to them.
To activate Faraja Loans, customers will be required to dial Dial *799#, and select OPT in. Once they opt-in, customers will be able to perform unlimited transactions up to their credit limit.
Customers who take these interest-free loans will be allowed to make partial repayments before their due dates. These partial repayments will boost their chances of qualifying for higher credit limits.
“To make repayments, you will need to dial *799#. Your transactions will be displayed, you can pay for only one transaction at a time. choose the one you want to pay for, press send,” states Safaricom.
You will be required to enter your M-Pesa PIN as the money is being paid from the M-Pesa wallet, press send, and a screen will appear for you to accept or decline. Once accepted, a notification will be sent confirming the transaction details, the amount paid and the new credit balance. The same can be done on the app.
“For a 30-day loan cycle, the loan is due on the 30th day and likewise, the 7-day loan is due on the 7th day after the loan is given,” states Safaricom.