Loans for Phones

PayJoy sees smartphones as the gateway to financial inclusion

PayJoy is a start-up based in San Francisco that offers financing for smartphones for people around the world without a bank account. Its mission is to provide financial inclusion for billions more people worldwide.

The company works with international financial institutions and retailers to get customers access to credit. Thanks to its technology, consumers without a bank account or formal credit history can buy smartphones on instalment payments and get cash loans. PayJoy turns smartphones into collateral through software that locks the phone when customers fail to make payments on time.

The technology doesn’t make underwriting reliant on traditional credit scores, but rather seeks to increase consumer willingness to pay by taking advantage of their desire to access their phone, which in turn can help keep default rates in check. Indeed, in much of the developing world, there’s little or no formal credit scoring system.

Founded in 2015, PayJoy says it has helped thousands of consumers with insufficient access to banking services in places including the US, Latin America, South-East Asia, Africa and India. It employs about 90 people globally and operates in more than 10 countries including Mexico, India, Indonesia, Nigeria, Kenya and Guatemala.

PayJoy doesn’t offer financing itself, but it works with local mobile phone manufacturers, distributors and lending institutions. It takes a cut from every loan originating from the use of its technology, a business model that lowers costs as well as risks for the company. Partners include Telefonica, Vodacom and Orange. The start-up is launching in six more countries through new partnerships with local organizations that include Mutual in Brazil, Wayni Movil in Argentina, MyBucks in South Africa, Panacredito in the Dominican Republic, Omnipagos in Honduras and COINFIN in Colombia.

The company believes that as smartphones become more affordable, they can be a stepping stone toward better financial inclusion because more financial services are now being provided digitally. According to a 2018 World Bank report, 1.7 billion adults globally don’t have a bank account, but two-thirds of them own a mobile phone that could help them access financial services.

PayJoy’s social mission is to make smartphones affordable worldwide through its device-locking technology, which enables people who lack credit history to buy a smartphone on a weekly or monthly instalment plan. It has a laudable long-term goal of reaching 1 billion people in emerging markets and plans to get there one smartphone at a time.

Its business model exploits the role that smartphones now play in people’s lives around the globe. Smartphones, along with constant connectivity, have become such an essential part of modern society that it can be compared with running water and electricity.