A new start-up business, Mobicred, which offers online credit payment facilities to consumers, hopes to convince digital shoppers in South Africa to make purchases using its service as a convenient and, it says, safer alternative to credit card purchases.
Every aspect of Mobicred’s service is online, from application to payment.
The start-up, which is registered as a lender at the National Credit Regulator, was funded by private equity from a group of private individuals who provided initial seed capital, with a second round secured from a hedge fund, which it declines to name pending finalisation of the deal.
Mobicred makes money the same way banks do from credit cards: from initiation fees when a merchant signs up, a monthly admin fee, a portion from every transaction, and interest.
Director and founder Jason Sive says the service works the same way as a credit card, except Mobicred does not offer clients a physical card. Rather, it’s a virtual revolving credit plan that requires no fixed monthly repayment fee. Whatever amount is paid back goes towards using the credit again. The credit facility can’t be converted to cash.
“Payments are made monthly via debit order,” Sive explains. “The minimum monthly payment is 10% of the facility used, much like how a credit card works.”
Sive, 36, who has a postgraduate degree in finance, leads Mobicred’s seven-man team. He comes from a start-up background, having co-founded First Health Finance five years ago. First Health Finance provides funding for medical procedures not covered by medical aids; he still serves as director of the company.
He then founded Mobicred seven months ago. He got the idea for the business last year when he was in Europe and came across a similar service called Bill Me Later, owned by PayPal, realising there was room in the South African market for such a product.
The sign-up process takes a few minutes to complete. Users have to fill in an online application form, and their credentials are then submitted in real time to a credit bureau, which cross-checks their details against a fraud database.
Applications are then assessed internally by Mobicred and a scorecard system, provided by another Cape Town company, consumer credit specialists Redwood Third Party Processing, is used to assess risk.
Users are then notified within a few minutes of signing up whether they have been approved to receive a “virtual” credit card. They do not normally have to submit their ID or any other legal document, Sive says. “There may be a few applications where we require some sort of verification, such as a salary slip or ID. But this should be the exception, not the norm.”
Four online merchants already use Mobicred as a form of payment — Digicape, 5Rooms, Style36 and Kinderelo. When a user shops at any of these stores — and they choose to pay using their Mobicred account — they must enter their login credentials and mobile number (to receive and then enter a one-time Pin for security).
Mobicred users can access their credit facilities online (via the Web or a mobi site) and can adjust their spending limits.
Sive says that the company is testing the product with other merchants and, because it’s a single credit facility, the process of implementing it is not cumbersome. He hopes that by the end of the year, there will be quite a few more merchants on board. — (c) 2013 NewsCentral Media
