Vodacom launches VodaLend Cash Advance for underbanked customers
Vodacom has introduced VodaLend Cash Advance, a tool that enables its clients to obtain small, quick cash loans. The mobile network provider claimed that the inclusion was intended for underbanked customers who require easy and quick access to money.
Customers of Vodacom can access the product through VodaPay, which offers cash advances ranging from R50 to R500. Once approved, the funds are advanced directly into the user’s VodaPay Wallet, according to Vodacom.
Vodacom stated that in addition to using the legally mandated criteria for affordability checks, it will also take into account a customer’s recharging and payment history when making a credit decision. Customers can settle the debt over 7, 14, 21, or 28 days.
“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.
“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.”
This announcement is coming barely 2 weeks after Telkom Business announced the launch of its Telkom Lend—a service that allows small businesses apply online for funding between R20,000 ($1,100) and R5,000,000 ($300,000). The development of a new service from Vodacom comes as no surprise as there has been a stiff competition in South Africa’s telecom sector.
Telkom Launches Telkom Lend to Offer Small Businesses Funding up to R5m within 24 hours
VodaLend’s other financial services, such as VodaLend Compare, Voucher Advance, and Airtime Advance, will be complemented by Cash Advance. While Airtime Advance enables users to purchase airtime on credit, Voucher Advance enables users to purchase vouchers on credit to purchase goods from retailers like Nando’s and Hirsch’s.
How VodaLend will Work
VodaLend Cash Advance, according to CEO of Vodacom Financial Services Mariam Cassim, aims to help millions of South African consumers who lack a formal credit history. According to Cassim, there was still a sizable portion of the population that doesn’t have access to formal financial services, with only 26 million South African consumers having a 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.
“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,” said Cassim.
Vodacom declined to disclose the interest rates it applied to its cash advances, but Cassim said that the product might be a “game changer” because it had lower costs than conventional short-term cash advance companies.
“On average, it’s up to 400% cheaper than using a mashonisa – it moves us beyond financial inclusion to real financial impact,” Cassim said.