Fintech startup FairMoney is building a challenger bank in Nigeria. The company first started offering microcredit and now plans to expand to current accounts and savings. FairMoney just raised an $11 million Series A round (€10 million) led by Flourish, DST Global partners and existing partners Newfund, Speedinvest and Le Studio VC.
FairMoney lets you get a loan from its mobile app. After answering a few questions and sharing financial information, the startup analyzes this data set as well as your geolocation, other apps installed on your phone and other factors to give you an answer in a few minutes.
On average, people borrow the equivalent of $33. Eventually, if you always repay on time, you are able to borrow as much as $415. Interests vary depending on repayment periods and other factors,
but the maximum annual percentage rate is 13% (Update: Interest rates can be much higher than that. Monthly interest rates range from 10% to 28% EIR (Effective Interest Rate per month) and APR range from 120% to 260%.)
When you apply for a loan, FairMoney then uses traditional bank transfers to credit the money — bank transfers occur within a few minutes in Nigeria. You can then repay using cash with partner bank tellers, bank transfers or SMS.
FairMoney has a lending license in Nigeria. The company will partner with microfinance institutions to launch current accounts, savings and facilitate payments. Eventually, FairMoney hopes that it’ll get its own microfinance license from the central bank.
Like many challenger banks, FairMoney wants to become a financial hub for all your banking needs — one app to rule them all. That’s why the ability to hold money in your FairMoney wallet will be key. For users without smartphones, the startup is also working on an SMS interface to transfer money.