Safaricom Faraja Loans: How To Register, Loan Amounts, And Everything To Know

Faraja is a novel credit offering born out of a partnership between Safaricom, the pioneer of mobile money transfer with M-Pesa, and EDOMx, a leading lending provider. Faraja, which means "relief" in Swahili, is aptly named, providing relief for customers who wish to purchase items and pay later at zero interest. It also promises relief for businesses, reducing lost sales due to customers' lack of funds at purchase.

The Rise of Buy Now Pay Later (BNPL) Services

The demand for BNPL services has grown globally, and Kenya has been no exception. With the successful case of Lipa Later, it was only a matter of time before Safaricom dipped its toes into this promising market. Faraja, the answer to this trend, was designed with a simple philosophy: to enable businesses to grow their sales by allowing customers to buy what they need and pay for it later.

Faraj a's Unique Proposition

Faraja stands out in the crowded BNPL market by offering zero-interest loans. Customers can purchase items ranging from Ksh 20 to Ksh 100,000 and have 30 days to complete payment without incurring interest. This differentiates Faraja from other BNPL products, which usually charge interest but allow longer repayment periods.

How Does Faraja Work?

Interested customers can access Faraja by dialing *799#, opting in, and making payments. The service can also be accessed via the Faraja mini-app on the M-Pesa app. To qualify for Faraja, one must have been an active M-Pesa subscriber for at least six months before registration.

Once registered, customers can purchase multiple items as long as they remain within their assigned credit limit. Faraja initially determines its credit limit, which can change over time based on factors like transaction history and external data sources.

Default on Repayment

But what if you fail to repay within 30 days? Faraja doesn't apply any penalties for late payments. However, non-compliance with the repayment schedule could result in a reduced limit or disqualification from future product use.

Faraja for Businesses

For businesses, Faraja is a win-win situation. Safaricom helps EDOMx extend the service to more than 606,000 businesses, receiving an agreed-upon facility fee. When customers purchase Faraja, the businesses receive immediate full payment for the product or service.

Is Faraja Beneficial for Everyone?

There's no doubt that Faraja is revolutionizing the retail experience, both for customers and businesses. Yet, it's worth pondering how EDOMx and Safaricom benefit from this arrangement. We can guess that Safaricom benefits as more people use M-Pesa, but EDOMx's revenue model needs to be clarified. One hypothesis is that they earn revenue from merchant collaborations, allowing Faraja payments.

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Conclusion

Faraja has a lot to offer, and it might just be the game-changer in the Kenyan retail and financial sector. Offering zero-interest loans bridges the gap between the moment of desire and purchase, making it a win-win for businesses and consumers.

FAQs

Q1: What is Faraja?

 Faraja is a BNPL service, a partnership between Safaricom and EDOMx, offering zero-interest loans to customers for purchases.

Q2: Who can access Faraja? 

Any active M-Pesa subscriber who has used the service for at least six months can register for Faraja.

Q3: How can I register for Faraja? 

Customers can register by dialing *799# or through the Faraja mini-app on the M-Pesa app.

Q4: What is the credit limit in Faraja?

 Faraja determines the credit limit and changes over time based on factors like transaction history and external data sources.

Q5: What happens if I fail to repay within 30 days?

 Non-compliance with the 30-day repayment schedule could result in a reduced limit or disqualification from using Faraja.

Q6: How do businesses benefit from Faraja? 

Businesses receive immediate full payments for products or services when a customer purchases using Faraja, reducing the risk of lost sales due to a lack of immediate funds.

Disclaimer:

 This article aims to provide information about Faraja loans. It does not provide financial advice, and readers should seek a financial advisor's advice or conduct thorough research before making financial decisions. The accuracy of information is based on the data available at the time of writing.