In a move inclined to upend the mobile loans industry, Safaricom has introduced a zero-interest credit facility known as Faraja that would let millions of its users shop for items up to Ksh100,000 at selected outlets and pay later.
Users of the interest-free Faraja product will be able to purchase goods and services for as little as Ksh20 to as much as Ksh100,000 without incurring any additional costs not found with other credit products.
Similar to the Lipa Later service, Faraja allows customers to purchase items directly from a list of chosen merchants without having to pay for them in full upfront or installments.
The increase in Lipa na Mpesa transactions at particular businesses presents an opportunity for Safaricom and Equity to generate revenue. Numerous businesses, such as Citi Walk, a shop that sells shoes, the Goodlife pharmacy, and Naivas Supermarket, have already signed up to be merchants.
Faraja will revolutionize the mobile loan industry by offering lower rates than more expensive credit products like its own Fuliza and those from digital credit providers like Tala, Branch, and Zenka.
Safaricom and Equity are trying to capitalize on the increase in Lipa na Mpesa purchases at particular retailers. Numerous establishments, such as Citi Walk, a shoe store, and the Naivas Food Market, have already signed up as merchants.
Launched by Safaricom in June 2013, Lipa na M-Pesa has aggressively sought out merchants nationwide, including big and small companies like gas stations, supermarkets, corner stores, and restaurants.
Due to the platform’s popularity as an alternative to using cash to do business, payments of over Sh1.4 trillion went through Lipa-na-M-Pesa in the year leading up to March.
According to Safaricom, you will only need to use the specified Paybill number or other channels they may occasionally give to refund the remaining facility amount you took.