The internet migration of the South African loan market

Their online marketplace may not be as advanced as Europe and the USA but South Africa is experiencing an increased move to a digital lifestyle due to a surge in smartphone and tablet adoption. As people become more digitally aware, opportunities are opening up for many companies to transact online with their customers.

Internet penetration is on the increase across many sectors and South Africans are now choosing a mixture of both instore and online shopping . This increase in online adoption has seen a growth in not only sectors such as grocery shopping and banking but also an online migration of payday loan companies. Many of these companies now offer an easy to use and comprehensive service that can be accessed via an app or mobile site.

With the recent controversy and publicity surrounding payday loan companies the industry has suffered at the hands of the press and companies are having to go that extra mile to provide not only a good service but also a good user experience.

Despite this bad coverage the industry is still worth R400 worldwide and demand for the service is still high. So how do companies stand out from the rest and push themselves above the parapet of doom in a bid to prove that they can offer the users a good experience? Wonga are among the payday loan providers who are providing loans of up to R2500 for new customers and up to R8000 for existing customers with a good history. Their mobile website is very straightforward to use with a landing page that gives you the functionality to calculate how much you want to borrow and over what term. With these more reputable companies their websites also clearly advise their terms, the expectation of repayment and advice on only agreeing to the loan if the lender can afford to pay it back in full on the agreed date. The more well known companies like Wonga state “Unlike some lenders or credit card providers, we won’t keep extending your existing balance or encourage you to make minimum repayments . So please think very carefully before you apply, because we expect you to repay us when you promise to”.

There will still undoubtedly be a stigma that surrounds this form of lending as with any debt. It doesn’t just apply to payday loans but also credit cards and other secured lending. Debt is not the desired position but sometimes a necessity. As long as there is transparency in the marketplace and customers are given the correct advice and restrictions then it can be managed. With many payday shops now closed the online migration will lead to a reduction in overheads and in turn these reductions should be passed on to the borrowers. Tighter regulations in the industry as a whole should also make it a user friendly option for people who find themselves in the position of needing to transact with these companies.

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