Safaricom unveils zero-interest credit facility for the purchase of goods for up to Sh100,000

Safaricom has officially introduced the zero-interest credit service called “Faraja,” which allows customers to purchase goods valued at up to Sh100,000 on credit. Initially, the financial regulator had blocked this service, but now it’s set to shake up the mobile loans market, challenging products like Fuliza, a mobile overdraft service offered on M-Pesa.

Faraja enables Safaricom’s vast customer base of over 32 million users to make credit-based purchases from businesses registered on Lipa Na M-Pesa. Customers can buy goods ranging from Sh20 to Sh100,000 at zero interest and have up to 30 days to complete the payment.

Peter Ndegwa, the CEO of Safaricom, highlighted that many businesses miss out on sales when customers want to buy but lack immediate funds. With Faraja, businesses can grow their sales by allowing customers to buy now and pay later.

The partnership behind Faraja involves EDOMx Ltd, a Kenyan financial technology firm, and Safaricom. The service is already available at various merchants, including Naivas Supermarket outlets, Goodlife pharmacies, and City Walk.

Through Faraja, businesses will receive full payment for products or services immediately after a customer completes a payment using the service. Safaricom will enable EDOMx to offer the Faraja service to over 606,000 businesses on Lipa Na M-PESA, with a facility fee negotiated and payable by the business.

EDOMx will extend credit to businesses on the platform, allowing them to receive instant payments when customers use Faraja for purchases. The Central Bank of Kenya approved the launch of Faraja after granting EDOMx the status of a digital credit provider in March. This move aligns with the regulations published last year, which aim to regulate fintech, preventing predatory lending practices, and safeguarding consumer privacy.

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