South Africa: Vodacom launches VodaLend cash advance for underbanked customers

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Vodacom Financial Services has introduced a new product called VodaLend Cash Advance, which provides customers with fast and safe access to money when they need it most urgently.

The VodaLend Cash Advance is the most recent addition to the suite of financial services offered by VodaLend, which also includes the VodaLend Compare service, the Voucher Advance service, and the Airtime Advance service.

  • Vodacom Financial Services established VodaLend Cash Advance to enable consumers fast, secure access to cash
  • This new feature is geared toward unbanked consumers who require quick and hassle-free access to funds for various reasons
  • The financial services are exclusively offered to Vodacom customers through the VodaPay super app

This new feature is geared toward unbanked consumers who require quick and hassle-free access to funds for various reasons, such as an unexpected trip to the doctor or topping off a pre-paid electricity account just before payday.

The financial services are exclusively offered to Vodacom customers through the VodaPay super app. It is a component of the telecommunications company’s purpose-led ambition, which includes accelerating financial inclusion for South Africans and ensuring that no one is left behind.

According to Mariam Cassim, Chief Executive Officer of Vodacom Financial Services, there is still a sizeable portion of the population that does not have access to formal financial services, as only 26 million South African consumers have a proper credit record.

People who have historically been unable to obtain loans due to high fees and cumbersome paperwork can now take advantage of the affordable lending options made available by VodaLend Cash Advance. These people have the greatest need for these services but have been prevented from obtaining them in the past. Customers can enjoy a streamlined, hassle-free, and risk-free experience thanks to the fact that it can be accessed in-app on a reliable digital platform.

Customers of Vodacom can get a cash advance starting at just US$ 2.95 (R50) and going up to US$ 29.5 (R500), with the option to pay it back over 7, 14, 21, or 28 days.

The Vodacom customer’s recharge and payment behaviour is considered during the credit decision-making process, and this is done in addition to the regulatory requirements for affordability checks, which are required.

The service is now available to many people, including first-time borrowers, who can reap the benefits of a safe and regulated lending solution.

When the transaction is complete, the funds are transferred immediately into the user’s VodaPay Wallet. It can be used directly for in-app purchases, such as buying pre-paid electricity and water, paying bills, using scan-to-pay technology in stores, and sending money to friends and family members.

Because its fees are lower than those charged by traditional providers of short-term cash advances, this cutting-edge product has the potential to revolutionise the industry.

It is up to 400 per cent cheaper on average than “a mashonisa” (Mashonisa is township slang that refers to a money lender or a loan shark.)

As Cassim points out, it takes us beyond financial inclusion and into the realm of tangible economic impact.

“Since its launch in October of the previous year, our super app has attracted 2.8 million downloads, demonstrating a massive desire to participate in the digital economy.VodaLend’s product suite is also doing very well; with the new Cash Advance offering, I’m excited to see even more people across the board enjoying the benefits of financial independence,” Chief Executive Officer of Vodacom Financial Services Mariam Cassim said.

Consumers are changing their behaviour directly due to increased financial burdens, such as an increased cost of living; therefore, it is even more crucial for businesses to provide individualised, cutting-edge, and easily accessible services.

Vodacom Group’s most recent financial results for the year that ended on March 31, 2022, reveal growth for the telco’s new financial and digital services, which have increased by 8.5%, and indicate that satisfying this need is on the way to becoming increasingly feasible.

 

counting the world unbanked [Photo/Mckinsey]
Why Africa Is A Budding Global Fintech Hub [Photo/Penser]

The Unbanked South Africans

South Africa is having difficulty integrating its unbanked population. These difficulties have hampered the country’s economic development.

As per a report by the Oxford Business Group published in 2021, an estimated 23.5% of the country’s population is not in the system, and  US$1.04 billion (R12 billion)  in cash is reportedly held outside banks. While the country is very advanced in some ways, parts of society are still economically challenged; approximately 25% of the population is unemployed, 39% is poor, and 21.7% live in extreme poverty.

The banking sector is structurally unsuited to expand into the country’s poorer and more remote areas.

It is highly conservative and concentrated, with regulations focusing on soundness and stability, all of which can make committing resources to collect smaller deposits and making smaller loans difficult.

The World Bank has proposed a tiered licencing system in which specialised institutions are specifically designed for the lower strata of the market. Similar programmes are currently in place in other African countries, such as Ghana, where licenced rural banks provide retail loans to underserved markets.

The Unbanked population is one of the prevalent difficulties in Africa. Providing fintech start-ups businesses opportunities to develop solutions to this issue, a good example is Hellopay.

Hello Pay is a South African fintech company and champion of financial inclusion for developing small and medium-sized enterprises (SMEs) in the country. By offering SMEs access to competitive and commercially viable business loans of up to US$ 14,755.6( R250,000.0)

Telkom Business ( SA)  also announced the launch of Telkom Lend on August 22 2020, a platform that would enable small businesses to seek funding online and receive a response within 24 hours.

Read: Telkom Business’ US$ 293,834 funding for SMEs within 24 hours

Maingi Gichuku is passionate about helping African businesses grow by offering technology solutions. With a BSC in Zoology and biochemistry, Gichuku yearns for an Africa that can find solutions to its challenges. My drive is to see an economically dynamic Africa and embrace its populations by creating opportunities cutting across the social and economic strata.

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