Safaricom’s Faraja product takes the Fuliza route of ruthless late repayments

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Safaricom has a product in the works called Faraja. Basically, it allows customers to shop at retail stores with credit. The loan is then repaid after a given period, but it does not charge interest.

Now, while not fully official yet, likely due to licensing issues with the CBK, the product has already raised some eyebrows as to how it will run.

Before looking at these issues, let’s look at how Faraja will work.

First, the product will be offered by a company called Faraja Credit. So he’s partnered with Safaricom and is looking to reward longtime Safaricom customers with another channel to access credit.

The credit period will vary from one week to one month. Plus, all you need is a Safaricom SIM card, and you’re good to go.

Credit limits will be based on credit viability, just like other lending platforms.

That’s not all: Faraja will only be available for a maximum of two accounts under the same National ID.

Customers can access Faraja as many times as they want and within their credit limit.

And just like Fuliza, customers will not be allowed to withdraw money from their Faraja accounts because, as noted, the funds are only available for point-of-sale transactions and bill payments.

This means that you can only use Faraja for Lipa na M-PESA and Pay Bill transactions at outlets that allow Faraja transactions.

Points of sale are also located on the Faraja Credit Application, which is also in early access on Google Play Store. I tried to run the app, but it couldn’t register me. Therefore, you’d better use the provided USSD.

One of the outlets will be the Naivas supermarket chain.

Whenever it becomes official, customers will only need to dial *799# to view their transactions. They can also pay for a transaction at their convenience.

Refunds are charged from your M-PESA wallet. The procedure is the same for 7-day or 30-day loans.

Partial refunds are also acceptable. Earlier payments will see a customer increase their credit limits.

The minimum amount customers can access on Faraja is KES 20 and the maximum is KES 100,000, but this is limited to your approved credit limit.

Credit is available for Bug Goods and Paybill numbers.

If you default on the loan, you will not pay any late payment penalties. However, late payment will prevent you from using the product in the future.

Now this is where things get interesting: Safaricom has since revealed that it will deploy debt collectors in the event that a Faraja loan has not been repaid by the agreed due date.

This is the first time the telco has done this kind of development. Other products such as M-Shwari are not subject to such strict regulations and, in the event of a defect, Safaricom simply lists the affected groups with the CRB.

The changes are also akin to what Safaricom did with Fuliza at the end of 2021. Specifically, customers have a maximum of thirty days to settle their overdraft, otherwise the operator will extend its arm, including sourcing funds from a failing M-Shwari or their KCB/NCBA. bank accounts to cover the facility.

At any time after the occurrence of a continuing Event of Default, KCB and NCBA may, without prejudice to any other right or remedy granted to us under any law: hold any of your funds in credit with KCB or NCBA as security and surety for any amounts unpaid and owed by you in respect of the installation or service – Safaricom changes about Fuliza.

It will be an exciting time for customers using these products. The company is already a hit with all products associated with its mobile money products, including Fuliza whose revenues have since exceeded what the phone company does from KCB M-PESA and M-Shwari.

Let’s also not forget the fact that Kenyans have an appetite for mobile loans because they are easy to access and economic difficulties force them to seek credit.

The state has since introduced some common sense into the lending space. The CBK Amendment Bill, 2021 now wants agents working for digital credit providers to never: use threat, violence or other criminal means to physically harm the person, their reputation or property; use of obscene or profane language; make unauthorized or unsolicited calls or messages to a customer’s contacts; use inappropriate or unreasonable debt collection tactics, methods or conduct; and any other conduct the consequence of which is to harass, oppress or abuse any person in connection with the collection of a debt.

Will the rule be respected? Only time will tell.



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