Making bulk purchases and payments are always a pain in the neck, especially when you are an employee or self-employed and have to wait till the end of the month to get paid. Imagine having to pay for your annual house rent in January just after the Detty December celebrations, not easy at all. However, some players in the financial sector are working hard to make sure that no one gets to pay in bulk anymore.
Founder and CEO of Creditclan, Femi Bejide stated on the Nairametrics Business Half Hour that Creditclan wants to ensure that no one needs to make bulk payment for anything again, whether in education, rent, health or others.
“The plan is to help everyone to afford with ease, the things that they would have had to pay in bulk. So you can pay your rent in instalments, same with school fees, and any other bulk purchase can be conveniently spread across a number of months,” Bejide said.
With this, people can structure their living standards within their income streams with convenience. It is a fact that no one gets his annual income all at once or in bulk, and this is one reason why paying rents, fees and other purchases in bulk puts a strain on income.
The Buy-Now-Pay-Later is a new scheme that Creditclan recently ventured into after about three years of providing credit infrastructure, technology and data to fintechs and banks. As a credit infrastructure platform, Creditclan has been focused on helping to provide credit facilities to clients so that they can better offer credit to their customers.
The idea for Creditclan was first born in 2009 when Bejide was managing a small lending house in Lagos State and realised that credit in Nigeria was operating within several constraints.
“It was then I realised the massive infrastructure deficit that credit companies have in terms of data, operations, technology etc. Nigeria and Africa need to solve the credit and growth problems in the continent, and these constraints will continue to pose a challenge. That was what we came to solve in 2018 with Creditclan.
“We are not a credit company per se. We are the technology that drives credit. Some credit companies use our infrastructure and technology to drive their credit. So, we are a credit infrastructure company, not a credit company ourselves,” Bejide explained.
The new Buy-Now-Pay-Later scheme is building a last mile for credit, taking it to the point of transaction for schools, parents, rents, merchants, buyers, and others whom the credit companies would ordinarily not have considered for credit facilities.
There are individuals who are being denied credit by the credit companies and banks due to absence of data to determine their creditworthiness. This includes the self-employed who have no salary structure, the unbanked and under-banked who also have limited financial data against which they can be assessed. By filling the data and infrastructure problem, Creditclan is helping the credit companies make better credit decisions and offer credit, not just to salary earners but to other creditworthy Nigerians.
“The biggest challenge is establishing who should get the credit. Once we establish that, the banks and the fintechs can do the credit part. Nigeria does not have such strong credit score rating. We came into a space that lacked data and technology, we doubled down and fixed that. So, we are able to use all that to get the right people to give credit. Your cashflow, identity and credit history analysis, your social traction, alternative channels like social and psychometric tests, etc all gives us patterns to tell us within minutes how credit worthy you are, and determine if you have so much at stake that you would not want to default. The credit companies can now use this to reach disbursement decision,” Bejide stated.
Still, along these lines, Creditclan launched the Buy-Now-Pay-Later scheme a couple quarters ago to take credit to where they are sorely needed. The scheme not only simplifies credit infrastructure but also helps banks, merchants, schools, and other businesses offer the pay later option to consumers across Africa.
This infrastructure has now been introduced into thousands of schools across Nigeria as School-Now-Pay-Later, so that parents are able to pay school fees in instalments – daily, weekly and monthly based on their income plan.
Creditclan saw that with the current economic challenges, millions of parents had their incomes hit by the pandemic and were struggling to pay school fees in bulk. This in turn had the schools struggling with cashflow.
“In a relatives-owned school, I saw parents, just coming out of lockdown, struggle to pay their ward’s fees, especially traders, artisans and self-employed people whose earnings had been decimated by the pandemic,” Bejide said.
Left to continue, this could result in an increase in out-of-school kids. The school-now-pay-later scheme came in response to this, and to help both schools and parents, particularly those where the parents are mostly categorized as underbanked or unbanked.
Creditclan hopes to get up to 150,000 merchants on the buy-now-pay-later scheme by Q2, 2022 so that more sectors like the medical, real estate, and insurance will have businesses offering pay-later options to customers.
How are they able to ensure full payments are made, especially for first time borrowers?