VCL Financial Services yesterday officially launched its new short-term credit facility for mobile money, M-Pesa, clients.
The facility is meant to help clients meet their urgent financial obligations.
Dubbed Ntlatse, the facility expands the number of financial services offered by M-Pesa, thereby increasing financial inclusion for M-Pesa users.
Offered in partnership with locally-owned financial service provider, Redeem Financial Services, the facility avails funds instantly.
Ntlatse is accessible on the M-Pesa platform and functions by helping customers to top-up their M-Pesa accounts to perform transactions despite having insufficient funds.
Transactions that are supported under the credit facility include sending money, paying bills such as electricity or paying a merchant.
Interest rates for the short-term loan begin from eight percent for one day up to 17 percent for a month.
While the service is available to all M-Pesa customers, the amount of credit one can get depends on each individual’s creditworthiness as determined by the service provider.
Among other things, a customer’s behavior in repaying existing Vodacom Lesotho airtime advance is considered when determining how much they can be borrowed.
Repayment of the short-term loan is through automatic deduction from the M-Pesa account when a customer deposits money.
Addressing journalists during the launch of the facility, Palesa Mphunyetsane, VCL Financial Services managing director, said the facility would advance financial inclusion for the unbanked population living in remote areas.
“This facility was inspired by the hardships that ordinary people without bank accounts have to go through in order to access credit,” Ms Mphunyetsane said.
“With this innovative solution, we are creating a better experience for our customers by affording them instant access to credit to enable them to transfer money, pay bills, purchase from merchants, even when they have insufficient funds in their accounts.”
She said the company would soon announce more improvements on the M-Pesa service.
On his part, Redeem Financial Services chief operations officer, Thuso Mpholo, said M-Pesa users who qualify for the service are those who have updated their registration particulars with national identity numbers, residential address and proof of income.
He said they must also have been using the M-Pesa service for a minimum of three months.
“Customer behaviour differs on M-Pesa, and each customer’s behaviour determines their individual score in our assessment, which in turn determines how much, and how often a customer may receive top-ups from Ntlatse,” Mr Mpholo said.
VCL Financial Services financial services manager, Boniswa Nhlapo, said the credit facility can also be used by small entrepreneurs to meet urgent financial obligations to advance their businesses.
Users can access and sign up for the facility by dialing *200#, then continue following normal procedure for intended transaction.
The overdraft will be automatically applied in the case where clients have inadequate funds in their account to complete the transaction.
Clients can get loans from as little as M0, 01 depending on their creditworthiness. The facility started working on 31 December 2021.