This week, Safaricom announced interest-free loans through its M-Pesa service. Subscribers can buy products for as little as Sh20 and as much as Sh100,000 with Faraja loans and pay them off later. The service will be offered by a few retailers, including Naivas, Good Life Pharmacy, and Citi Walk, and will be funded by Equity Bank.
The loans will not be subject to interest charges from the operator, but they will be subject to the standard M-Pesa transaction fees. Additionally, users must repay the credited amount within 30 days.
“You will only be required to repay the outstanding facility amount as advanced to you by us (in whole or in part) using the designated Paybill number or such other channels as provided by us from time to time,” Safaricom says in a statement on its Website.
Safaricom subscribers who meet certain requirements are eligible for the loan. Users’ credit limits are decided by their credit scores and must be for an active line. Faraja won’t allow customers to send money; instead, it will only be accessible through Paybill and Till Number options, unlike Fuliza, an overdraft facility.
How to use Faraja service
- If you are a subscriber, you can opt in to the service by dialing *799# and selecting ‘OPT in’
- You will then be prompted to enter your M-Pesa PIN after which Safaricom will send your Faraja credit Limit.
- To use the service at the merchants’, dial *799# and select the ‘Buy Goods’ or ‘Paybill’ option.
- Enter the amount and your M-Pesa PIN to initiate a transaction.
- Safaricom will send a notification on the success/failure of the transaction.
- Safaricom is planning to roll out the service to more merchants to include fuel stations, restaurants and more supermarkets.
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