Safaricom just introduced interest free loans on its M-Pesa platform dubbed Faraja. Faraja loans will allow qualified subscribers to buy goods on credit from as low as Ksh20 to a maximum of Ksh100,000 and pay the same amount later without any interest. The service is being backed up by Equity Bank and will be available on a list of selected merchants such as Naivas, Citi Walk and Good Life Pharmacy.
Loan payment period
Safaricom will not charge any interests on the loans, however, the usual M-Pesa transactions will still hold. Users will also be required to pay the credited amount within 30 days.
Qualification parameters and availability
Faraja is available to qualifying M-PESA customers, who have an active Safaricom connection. Credit limits are based on the individuals credit rating just like other loan platforms. Faraja will only be available for point-of-sale transactions and paying bills. This means that the loan facility will only be accessible via Paybill and Till Number. This is different to it’s overdraft counterpart, Fuliza, which allows clients to send money.
Faraja activation and usage
Interested users will have to carry out the following steps.
- Dial *799# and select “OPT in”
- Key in your M-Pesa PIN, after which Safaricom will send you your Faraja credit limit.
- To use the service at the selected merchants, dial *799# and select ‘Buy Goods’ or ‘Paybill’ option.
- Enter the amount you wish to transact and key in your M-Pesa PIN to initiate the transaction.
- Safaricom will send a notification on the success or failure of the transaction.
Note that Faraja is only available for a maximum of two accounts under one National ID.
Apart from the listed merchants above, you can find other outlets from the Faraja website and the Faraja Credit app. Both are still under development, so you’re better off using the USSD code provide.
A subscriber should dial *799# to see their transactions. Payment for one transaction at a time is also acceptable.
The funds are then billed from your M-PESA wallet. The procedure is the same for 7-day or 30-day loans.
Partial repayments are also acceptable. Earlier payments will see a customer increase their credit limits.
Late payments will not attract any interest. However, late payment will disqualify you from using the product in the future.
What do you think about the product? Is it something you’d consider using?