Low-Income Nigerians Preferring Payday Lenders Over Banks

Low-Income Nigerians Preferring Payday Lenders Over Banks

Nigeria’s banking system has failed in offering adequate financial services to its people creating demand for high-interest micro-lending platforms.

Back in August 2017, Henry Apama-Aka discovered a lending platform known as Paylater which didn’t require any paperwork. The 27-year old entrepreneur and chef applied for a 10,000 Naira loan ($27) despite being sceptical initially. Within 10 minutes, Henry had received the loan amount in his bank a/c. Ever since, he has serviced seven Paylater loans in total and is in the process of settling an eight 100,000 Naira ($270) loan.

Apampa-Aka used the loan to open a small restaurant in Lagos named Sir Henry’s Barbecue. The restaurant offers private as well as commercial catering services. Apampa-Aka attributes ease of access to funding as well as trust in the digital platform as the main reasons for using Paylater several times. Paylater is among the few payday loan lending platforms that have been established in Nigeria recently (since 2015).

Nigeria is barely out of a recession and is already at risk of plunging into another since large businesses started moving abroad. Since Nigerians aren’t the best savers, surviving another recession will be a daunting task. According to World Bank statistics, less than 33% of small to medium size businesses are able to get loans in Nigeria.

Financial institutions in Nigeria have an exhausting credit process coupled with high interest rates and the need for collateral. This has made bank loans unattractive. When you consider other factors like the stringent property laws making property ownership difficult, it’s easy to see why regular Nigerians can’t secure bank loans.

Reforms that made payday loan lending attractive

The introduction of the BVN (Bank Verification Number) by Nigeria’s central bank has made Paylater among other payday lenders like Kwikcash and Lidya gain entry as credit providers in Nigeria. The BVN utilizes biometric security features and links to all accounts making it the 1st true record for Nigerians. Prior to 2015, bank records weren’t necessarily shared. Defaulters could move to other banks freely and get loans. This is no longer the case.

According to Paylater co-founder, Chijioke Dozie, Paylater has data scientists that help the lender with credit scoring. This year alone, Paylater has offered 300,000+ loans to Nigerians and boasts of approximately 90,000 active users every month. According to Dozie, the BVN system brings new levels of accountability to borrowers from platforms like credit unions gaining ground in Nigeria.

Although he acknowledges hurdles like high interest rates, Dozie states that interest charged on Paylater reduces as trust is built. The loan amounts available also increase which is the same with Kwikcash. According to the MD of Mines Nigeria, the company which owns Kwikcash, the platform’s terms match the current reality – making collateral-free loans available in Nigeria considering there is no lending infrastructure.

Paylater is available on Google as well as Apple stores. Kwikcash can be found via USSD, a feature which is widely used by a majority of Nigeria’s unbanked population. Although Kwikcash is relatively new, the lender has processed 1 million+ loans according to Sowho.

According to Kwikcash customer Emeka Eze, the lender is a supplementary income provider – a source of cash as you wait for your next pay cheque. Eze explains he isn’t able to survive with his salary past 20th of every month prompting him to borrow before he receives his next salary. Kwikcash is very attractive due to easy access; however, interest charges are still a major problem. Eze confesses to having a close friend who defaulted on their loan even after being granted four loan extensions.

According to economist Oluwatosin Ajani who lives in Lagos, these platforms offer temporary solutions for Nigeria’s under banked population. The platforms are offering a service that should be provided by banks. What’s more – the platforms charge high interest since there is very little to no competition according to Ajani.

Since Nigeria is under banked, payday loan services are available to a select class of individuals which doesn’t help expand payday lending which has a potential to boost growth, reduce unemployment and lift many Nigerians from poverty. Banks in Nigeria aren’t inclined to offer loans to small & medium scale enterprises since they don’t contribute to a huge chunk of the profits large companies and multinationals promise to offer.

According to Apampa-Aka, micro lenders provide a prosperity route. He will be able to secure a 1 million naira loan equivalent to $2,754 soon. Although payday lenders in Nigeria aren’t perfect, they are doing something to help his business grow.


UK Launches Fraud-Proof Bank Card to Block Contactless Scammers

UK Launches Fraud-Proof Bank Card to Block Contactless Scammers

The United Kingdom has launched a one-of-a-kind fraud-proof bank card that prevents fraudsters from cloning as well as using your card without your permission. The card has been launched in a UK high street – John Lewis stores.

The card dubbed SkimSafe resembles a typical bank card but features technology which stops fraudsters from stealing your personal information as well as using it anywhere. The card comes after £1 billion was lost via credit card and debit card fraud in 2017, a year when Britain recorded the highest case of card fraud (card not present transaction fraud) in Europe amounting to £409 million.

Since contactless cards were introduced, it is easier for fraudsters to target as well as steal people’s details using wireless scanners. Thieves can skim data from your contactless card – grab information using card readers which work wirelessly.

What’s more – fraudsters utilise wireless scanners to read sensitive personal information without your knowledge, going as far as “pulling” from cards which are inside your wallet, pocket or handbag in public places like restaurants or in public transport vehicles. These machines work via radio signals while close to you.

When your personal details are stolen, fraudsters can initiate transactions without your knowledge by using sites which don’t ask for CVV security codes (the three-digit number found at the back of a bank card).

According to SkimSafe, their new card can counteract the methods used by fraudsters making it impossible for your cards to be scanned and personal information stolen. The card fits into your wallet, card holder and purse and protects a maximum of 4 payment cards (either sides of the SkimSafe card) at a time. This translates to protection for a total of eight cards. SkimSafe blocks radio wave transmissions from your cards stopping the cards from being “picked” by thieves.

According to SkimSafe founders Bjorn Granberg and Carl Martinsson, the two are proud to introduce SkimSafe in Britain alongside John Lewis, their first retail partner. The founders confess to being “blown away” by statistics about card fraud – how card fraud is affecting Europe and most importantly, how it has affected the UK. According to John Lewis, there is a demand for SkimSafe to combat high levels of card fraud in the UK. As a brand, SkimSafe is dedicated to offering its clients exceptional customer service as part of the company’s duty to offer protection in/out of stores.

The device will set you back £24.99. Although the cost may appear high, it is the cheapest and best way to protect yourself from fraudsters targeting contactless cards. You can purchase a pack of 5 card defenders online (on Amazon) for £5.99. The card defenders do a similar job. The only difference is; you put your bank cards inside the card defenders.

Other options include using a variety of purses and wallets which have been specifically made to block contactless. You can also lace your wallet using tin foil to establish your own DIY protective barrier. You can test this out. Download a card reader application on your Smartphone and attempt to scan your wallet.

Quick tips: Protecting yourself from card fraud

Besides investing in a SkimSafe card among other card defenders, there’s more you can do to avoid other common forms of card fraud today. For instance, you must check for suspicious card activity often. Since technological advancements are continuous, you shouldn’t stop after you invest in SkimSafe or card defenders. The most foolproof way of ensuring you aren’t a victim of card fraud is checking your card activity regularly – as often as you check your bank account activity.

It’s also wise to enable real-time fraud alerts to notify you whenever suspicious activity is taking place on your card. Most credit card companies and financial institutions which issue cards can detect unusual card/account activity. You should subscribe to such notifications to deal with fraudsters as soon as possible.

Last, but not least, focus on secure payment methods only, i.e. mobile pay (with biometric authorization). Such methods rely on distinct biological characteristics such as facial recognition, thumbprint, etc. which make it hard for fraudsters to strike. With biometric authorisation components, fraudsters can’t be able to use personal information they steal from you. EMV chip cards have also made shopping safer.


eBay Buys Motors.co.uk: A Vote of Confidence for UK’s Used Cars Market

eBay Buys Motors.co.uk: A Vote of Confidence for UK's Used Cars Market

eBay has agreed on a deal to buy Cox Automotive’s motors.co.uk. This announcement comes as the American company increases its presence in the United Kingdom’s used car market after taking over Gumtree recently (in January 2018).

The deal will be finalised early 2019. eBay will integrate Motors.co.uk’s operations under Gumtree UK. eBay, Gumtree UK, and Motors.co.uk will cross-share classifieds in respective motors sections resulting in over 620,000 listings.

According to Gumtree UK’s general manager Matt Barham, the acquisition will offer UK car dealers increased reach by combining Motors.co.uk’s vast inventory, traffic, dealer engagements, and cutting-edge tools/services with in-market car buyers offered by Gumtree and eBay.

Car finance capabilities

The acquisition will also see Motors.co.uk bring part-exchange tools and car finance to the combined platform. The site introduces visitors to online broker Carmoney whose panel is composed of Barclays Partner Finance and Santander Consumer Finance. This will fill the noticeable gap between eBay and competing services like Auto Trader.

A few months to eBay’s acquisition, Gumtree offered a finance check feature on its Motors section but erased this feature months to the acquisition out of fears that the feature would scare off any potential buyers. According to Gumtree’s head of motors, Vik Barodia, Gumtree wouldn’t want increase potential responses to dealers since cars with outstanding finance can scare customer off.

Increasing demand for used car transactions in Europe

Through the acquisition of Motors.co.uk and by extension, its sub-brands which include Honest John, Parkers.co.uk, Raccars.co.uk and AutoVillage, eBay will increase an already stretched network of car-focused portals in Europe.

eBay has been involved in several acquisitions since the mid-1990s. Car marketplace www.mobile.de operating in France, Germany, and Italy is part of eBay. The same applies to Denmark’s BilBasen. These acquisitions add to generic classifieds website Gumtree whose global operations cover Poland, Singapore, Australian, and South Africa.

From Cox Automotive’s perspective, motors.co.uk disposal is a “refocus” from customer operations to data and logistics services for wholesalers and


According to Cox Automotive UK’s Chief Executive Martin Forbes, the eBay deal is great news as it enables the business, team, and brand to grow to the next level under new ownership that is more consumer-led.

According to Cox Automotive, the deal allows the company to shift focus to building on its strengths in supporting dealers, the wholesale market, OEMs, fleet & leasing customers with a connected retail proposition.

About eBay

eBay was started in 1995. The company has an impressive portfolio of e-commerce brands that connect people via technology. eBay connects millions of buyers and sellers globally creating economic opportunity and empowering people. According to the latest statistics, the e-commerce giant has 177 million active buyers on its platforms globally. Other impressive statistics include a record 1.1 billion live listings and 429 million app downloads. eBay is among the top 10 list of global retail brands today. For the 20+ years eBay has been in business, the e-commerce giant has managed to establish a presence in 190 markets globally. eBay stands out for being open to everyone and empowering people via technology.

The e-commerce giant is arguably the largest most vibrant marketplaces for unique selections and great value. In 2017, the company recorded $88 billion in gross revenues. With the latest acquisition, eBay gives a vote of confidence for the used car market in the UK.

About Motors.co.uk

Motors.co.uk is dedicated to simplifying car buying/selling in the UK. The website has been in existence for over 10 years and boasts of a wide range of reliable cars, long list of UK car dealers and countless site visitors. The website has the best variety of independent and franchise car dealers, private sellers and car supermarkets offering unmatched choice. The site adds thousands of car listings daily increasing the chances of consumers finding what they want.

About Gumtree

33% of UK’s digital population use Gumtree on a monthly basis. 1 in 3 adults uses Gumtree’s app every month making Gumtree UK’s top classifieds site and app. Gumtree’s Smartphone application has been downloaded 17.9 million + times. The website boasts of 1.7 million+ live listings at any given time making it the perfect platform for selling used cars and goods. The platform also has a variety of other listings such as properties to buy and rent, a variety of jobs, community events, professional services and much more.


The History of Payday Loans

The History of Payday Loans

Contrary to popular belief, Payday loans aren’t as new as most people would want to believe. The loans can be traced back to the 1990’s when unsecured credit started becoming increasingly available. The loans were incredibly attractive to individuals who struggled to secure traditional loans from banks.

Individuals with spending habits found it easy to borrow from payday loan lenders normalising trends such as buying on credit. Payday loans are largely responsible for making people “relaxed” about borrowing.

Although people found it difficult to open bank accounts and almost impossible to take loans in the 1920s, the 1990’s and 2000’s were very different. Payday loan lenders now offered borrowers a fast and easy option to get desired funds.

Internet penetration rates made it easier for the loans to become widespread. With safe online application processes, short-term online credit became a suitable option for many. Borrowers could receive cash in record time, often within minutes which made it possible for online lenders to compete effectively with established high street lenders.

Borrowers enjoyed the privacy offered by online loans, i.e. they were more discreet. The loans also had other notable benefits like; they could be applied from home or anywhere else as long as a person had access to the internet and a computing device.

During the 2000s the payday loan industry experienced a boom. Many people were using the loans, yet regulation was still lenient. Payday loan borrowers were taking loans on impulse. Industry players (lenders) were largely unchecked prompting irresponsible lending habits such as – offering loans without conducting affordability assessments. Lenders also started charging exorbitant interest rates and late fee payments among other charges.

Many lenders went as far as using unscrupulous debt collection mechanisms when dealing with borrowers who defaulted on their loans. Between years 2008 and 2012, the payday industry grew at a record pace. Consumers were turning to payday loans as the fastest and easiest credit option; however, most were facing difficulties during repayment.

According to CMA (Competition and Markets Authority) data, average payday loan debt stood at £1,200 despite lenders offering loans ranging from at £100 and £1,000 for every loan. A record 1.8 million Britons had payday loans in 2012. As the number of borrowers attempting to get out of debt increased and lenders increased the use of unscrupulous debt collection methods and extortionate fines and charges for late payments, they started developing a bad reputation.

2010 to 2015

Industry growth peaked in 2010 then began to shrink as many consumers lost trust in payday loan lenders. Risks associated with payday loans among other forms of short-term lending became more apparent, and many large lenders received a lot of negative publicity from 2010 onwards.

FCA intervention

Since payday industry regulation wasn’t effective enough, the newly formed FCA took the mandate of cleaning up the payday industry. Regulation commenced in April 2014. The FCA took over from the Financial Service Authority.

The first course of action by the regulator was ensuring safe borrowing. All lenders including those who had been approved by the FCA’s predecessors had to undergo fresh re-authorisation. All payday lenders and brokers were looked into. Many lenders were denied authorisation because they didn’t meet the FCA’s strict standards. Most of these lenders who included large players then left the market.
Fully authorised lenders and brokers were placed in the FCA’s register where consumers got access in their quest to find trustworthy lenders to borrow from.

Tighter regulation

Tighter regulation forced many lenders to compensate consumers for past malpractices. In June 2014, the largest payday loan provider at the time – Wonga was forced to pay £2.6 million as compensation for past malpractices. Later that year (October 2014), 330,000 Wonga borrowers had their loans written off after Wonga was found guilty of performing inadequate affordability assessments.

FCA cap

In 2015, January, the FCA introduced a fee cap ensuring short term loan lenders never pay fees and costs exceeding the loan amount. The cap increased trust in the industry boosting popularity for payday loans once again. However, some lenders never survived the fee cap. Fast-forward today, the short-term loan problem has extended beyond short-term sources of debt like payday loans to overdrafts, credit cards, etc.
In the near future, the FCA could very well extend the payday cap to such forms of short-term credit believed to cause the current debt problem affecting British households.


Scam Alert! Watch out for Black Friday Scams

Scam Alert! Watch out for Black Friday Scams

You are at risk of handing over your personal details to scammers in the name of Black Friday deals. Here’s why;

Payday loan scams aren’t the only scams you should be wary of. There are hundreds of malicious websites and apps out there currently looking to steal your personal details (name, phone no. and address) as well as credit card information. These apps and websites copy well-known brands in an effort to trick unsuspecting Black Friday shoppers to hand over sensitive personal information.

Experts have warned prospective shoppers to be wary of such websites as they search for “once a year” deals that offer scammers a perfect opportunity to rip off shoppers. According to experts, Cyber Monday and Black Friday are great times for shoppers to bag incredible deals; however, they also give scammers an opportunity to steal personal data.

During the Black Friday weekend, Britons are expected to spend approximately £8 billion. This puts many UK shoppers at great risk of scams and fraud.

RiskIQ’s take

According to cybersecurity experts RiskIQ, there are hundreds of malicious websites and apps already looking to take advantage of Black Friday to harvest credit card information and personal data. The dodgy apps and websites are luring shoppers by offering time-limited deals and incredibly low prices that are impossible to ignore.

It’s worth noting that many retailers use a similar method to boost sales during this period. It is therefore understandable why many customers fall prey to scam sites especially during periods characterised by great offers and customers who are in a rush to take advantage of the deals.

RiskIQ has found over 5.5% of 4,331 Black Friday related applications to be malicious – containing adware, credit card no. skimmers, malware, adware as well as mobile ransomware. According to the RiskIQ report on the matter, five leading brands in the UK anonymised in the report had their terms in descriptions and titles of over 6,600 blacklisted applications.

What’s more; the top ten most visited UK brands had approximately 17 blacklisted applications with their terms as well as the words Black Friday. In simple terms, scammers are creating dubious apps and sites using branding from legitimate brands in an effort to convince unsuspecting customers to download the dodgy applications and/or visit scam sites before their personal information is stolen.

According to cybersecurity firm McAfee, many British shoppers have already fallen for these scammers. Approximately 20% have already bought something

from a Cyber Monday and Black Friday website they didn’t recognise out of the fear of missing out on deals. In 2017, 40% of Black Friday transactions conducted online took place via mobile phones according to RiskIQ. During the same period last year, malware threats to consumers doubled while ransomware threats increased by 35% according to McAfee research.

Just recently, Amazon shoppers received a warning about Black Friday scams circulating on social media platform, WhatsApp. The scam purported to offer unbelievable discounts on product purchases.

Protecting yourself

Luckily for shoppers, there are steps you can follow to protect yourself and still take advantage of Black Friday deals among other similar deals.

According to Raj Samani, fellow and chief scientist at McAfee, bargain hunters must think before handing over personal information to anyone in the name of deals. This sentiments which were made in a recent interview with The Sun highlight the importance of thinking twice before “jumping on” online deals.

According to Samani, never rush to get incredible deals. Take some time to confirm you are dealing with a legitimate application or site first before you proceed and submit personal information. Samani insists on the importance of consumers approaching deals with skepticism. If a deal is too good, it is probably a scam until proven otherwise. Consumers must think before clicking on discount links or installing apps to get great deals.

The same applies when responding to messages and emails received via social platforms like Twitter, Facebook, and WhatsApp. If you find great deals in your inbox, check out where those deals are originating from directly as opposed to clicking on such links.

More to be wary of than scammers

An investigation conducted by Which reveals there is more for consumers to be worried about than Cyber Monday and Black Friday scams. According to Which some Black Friday products sell for less during other times in the year. In a nutshell, Black Friday may not be the best time to buy everything at a great price as many consumers have been lead to think.


Rip-off Car Loans Leaving Borrowers Owing More Than the Car’s Worth

Rip-off Car Loans Leaving Borrowers Owing More Than the Car’s Worth

The FCA is investigating personal contract purchases (PCPs) following soaring complaints which prove that some car finance players are engaging in unfair practices. Complicated car loans offered to unsuspecting customers by pushy salesmen are leaving thousands with deals they can’t afford.

The car salesmen behind this rip-off car loans are so eager to offer these lucrative loans popularly referred to as PCPs that buyers aren’t being offered enough time to understand critical details.

According to Stuart Masson of car advice website TheCarExpert.co.uk, customers are being offered one-sided stories about how great personal contract purchases are. Masson feels these deals aren’t bad when fully understood; however, they have become a popular way to buy cars, yet they aren’t the best option for most people.

PCPs have become increasingly popular to the extent of catching the FCA’s attention. The regulator has even launched an investigation and is expected to publish details on the same.

Negative equity trap

With PCPs, car buyers put a deposit before taking out a loan matching the cost of the car plus interest. However, every month, customers repay the difference between the estimated worth (3 to 4 years later) and the current cost plus interest. When the loan term expires, the motorist can pay a balloon payment (estimated value as agreed when the loan is issued) and own the car or return it and walk away. The motorist can also enter into a new personal contract purchase on a different vehicle.

Until recently, balloon payments on most PCPs were lower than the actual value of the car allowing customers to trade in their cars and use the resulting profit as down payment for a new car. In fact, this was the reason behind the popularity of personal contract purchases. However, the value of used cars has fallen.

Most PCP holders are now paying final payments which exceed the car’s worth. This has forced many to hand over their cars and be left “car-less”. The other alternative is paying a deposit for a new car or overpaying to keep the old car. What’s more: balloon payments attract additional fees. Those who choose to ditch their cars are made to pay for repair or pence-per-mile costs if the car has exceeded the mileage allowance stated when setting up the PCP.

Approximately 66% of drivers now use personal contract purchases to buy cars. According to recent statistics from the Finance & Leasing Association whose mandate is representing the motor finance industry, there has been an 8% increase every year in car sales via consumer car loans in car dealerships.

However, the number of used and new cars sold has only increased by 2%. The average car loan today is £15,115 compared to £14,234 during the same period last year. According to Masson, car dealerships make more profit selling finance than cars. Masson sees this as an industrial scale problem as opposed to a case of customers being stupid. He views PCPs as merry-go-rounds which are hard to abandon without losing your car or money.

A mystery shopping investigation by comparison site confused.com uncovers pushy sales practices with 10% of undercover buyers at car dealerships denied a chance to look for alternative car finance. 6% of buyers in the exercise felt they were being forced to take a PCP immediately. A separate poll conducted by the site reveals 20% of car buyers don’t feel sufficiently informed of what they are getting themselves into.

Increasing complaints in the past four years

Car finance complaints have quadrupled in four years providing enough evidence that the area is a source of concern. According to the Financial Ombudsman Service mandated with mediating fall-outs between customers and lenders in the financial services industry, there has been a sharp increase in hire purchase car loans and PCPs though most car finance agreements today are PCPs.

Complaints have increased from 1,511 back in 2014 to a record 5,805 in March 2018, a trend which isn’t slowing down given 2,031 new cases have been opened by the Financial Ombudsman in the second quarter of 2018. Although some complaints originate from car buyers who should have known better, the latest statistics by the Ombudsman account for 40% of the cases.


PCPs are a classic case of easy credit coupled with complicated rules or what many would call a “rip-off”. According to free online customer complaints service Resolver, the car finance market is in more trouble. The founder, James Walker, finds PCPs “fiendishly complicated” adding that any financial product that has been weighted spectacularly against consumers is unfair. According to Walker, PCPs should be straightforward with no hidden costs or terms.