Vodacom has launched its cash loan service called VodaLend Cash Advance, a product that allows its customers to take out small short-term cash loans.
The mobile network operator said the addition was geared towards underbanked consumers who need quick and barrier-free access to funds.
The product will be available to Vodacom customers through VodaPay and offers cash advances between R50 and R500.
“Once approved, the money is advanced directly into the user’s VodaPay Wallet,” Vodacom said.
“It can be used instantly for in-app purchases, including buying prepaid electricity and water, paying bills, scan-to-pay in shops, and sending money to friends and family.”
Customers can settle the debt over seven, 14, 21, or 28 days.
Vodacom said it would use the regulated requirements for affordability checks while also considering a customer’s recharge and payment behaviour in the credit decision process.
“This ensures that the service can be accessed by more people, including first-time borrowers who can now enjoy the benefits of a secure, regulated lending solution.”
Cash Advance complements VodaLend’s other financial products, including VodaLend Compare, Voucher Advance, and Airtime Advance.
Voucher Advance allows users to buy vouchers on credit to buy products from stores, including Nando’s and Hirsch’s, while Airtime Advance lets customers buy airtime on credit.
The latter has proven incredibly popular, with Vodacom’s latest annual results showing that the product accounted for 45.2% of all total prepaid charges, amounting to R13 billion.
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Vodacom Financial Services CEO Mariam Cassim said VodaLend Cash Advance aimed to assist millions of South African consumers with no formal credit record.
“With only 26 million South African consumers having a formal credit record, there is still a significant part of the population that doesn’t have access to formal financial services,” said Cassim.
“VodaLend Cash Advance provides affordable access to lending products for those who need these services most, but who have historically been prevented from doing so due to high fees and difficult-to-navigate paperwork.”
Vodacom did not provide details about the interest rates it charged on its cash advances, but Cassim said the product was a potential “game changer” as its fees were less than traditional short-term cash advance providers.
“On average, it’s up to 400% cheaper than using a mashonisa – it moves us beyond financial inclusion to real financial impact,” Cassim said.
Source: My Broadband
