A Kenyan startup has developed a fully automated system dubbed M-Pepea set to revolutionize country’s credit system by offering instant loans to workers at a fee via their mobile phones.
M-Pepea (Emergency Mobile Credit) targets employees on full-time basis registered for the service and offers small emergency loans ranging from (US$58 to US$350) depending on pay-scale. Users can access loans anytime anywhere without the necessity of having to wait for advance approvals or having to visit a financial institution to request for emergency money.
To be eligible, employees and their employer register for the service and then borrowers can request loans by sending a blank SMS to M-Pepea. The system will automatically send a request to M-Pesa to credit the borrower’s number with the specified amount depending on their contract.
The loan is repaid through a check-off system from the borrower’s salary at an interest rate ranging between 10 to 15%.
M-Pepea has been developed by Kenyan based innovation company, Raven Ltd, founded in 2010, to offer basic financial services through mobile money transfers.
According to Raven, M-Pepea is not intended to compete with traditional micro-lending as it only applies to emergency situations where users can within a short period of time access money to fulfill short term objectives.
Similar services including Txt loan, Instant txt loans, 24-7 Money Box, Cash Genie currently in use in the UK.