MobileMoney Limited (MTN MoMo) has launched a new in-wallet loan scheme called XtraCash, which offers up to GHS5,000 microloans, with very flexible repayment terms.
The move comes on the back of feedback from users of the three existing loan offerings on the MoMo platform, namely QwikLoan, Ahomkah Loan and XpressLoan.
Speaking during a live interview on Facebook dubbed MTN MoMo@15 Live Session, Yaw Ayarkwah Adjei Saifah, Head of Bank Tech at MTN MoMo said XtraCash was developed in response to specific customer demands for more flexible loan repayment options.
According to him, the feedback highlighted the need for shorter repayment periods and lower interest rates, with many customers requesting loan terms of less than a month.
“We realized some customers needed loans for just three days or a week, but our existing products were structured for monthly repayments,” Saifah said. “To address this, we introduced the XtraCash scheme to meet those needs.”
So unlike the three existing loan schemes, which offer up to GHS3,000 with fixed repayment period of 30 days, the new XtraCash Loan allows customers to access up to GHC5,000—a significant increase from the three existing loan products.
According to Saify, XtraCash offers three repayment options:
1. Any Day Loan: Customers can repay the loan on any day within 30 days. The starting interest rate is 7.50%, and additional 0.05% interest is added daily until the customer pays it off. So if it runs the full 30-day term, the total interest will be 9%. One to two days default attracts a 10% flat penalty. A default for 60 days and beyond, takes the interest to 20.4%.
2. 7-Day Loan: This option allows customers to take out a loan and repay it within 7 days, catering to those who need short-term financial support. The interest rate on this category is between 7.55% and 7.565% per the feedback from *170# USSD channel, payable in one week. Default attracts a 10% flat penalty.
3. 28-Day Loan: For those who prefer a more extended repayment period, this loan can be paid back within 28 days. It has a starting interest rate of 7%, but incurs an addition 0.35% interest every week, which means at the end of 28 days, the interest gets to 8.4%. But if the customer pays earlier, the interest rate will be calculated in relation to the time of payment.
Like the three other loan schemes on MTN MoMo, each of the loan categories under the XtraCash scheme also attracts a 1% processing fee, which is charged upfront before that borrowed amount is credit to the customer’s wallet.
When asked about the criteria for loan approval, Saifah explained that MTN does not intentionally deny loans to certain customers, but loan eligibility is based on the individual customer record, including their transaction history and any prior records of defaulting on loans.
“To qualify for a MoMo loan, customers must have been active on the MoMo platform for at least six months and maintained a good transaction history,” he added.
He cautioned customers that failure to repay loans on time will attract up to 12.5% interest, adding that a deliberate refusal to repay loans will be captured by credit scoring institutions, and it will affect the defaulting customer’s chance of accessing loans anywhere else in the country.
Also Read: VIDEO: Ecobank Ghana disburses $600 million via XpressLoan, with 4% default rate
Watch full interview below:
