When microcredit becomes a lever of loyalty and growth for e-commerce

In the race for diversification, e-merchants are hitting the bull’s-eye to build customer loyalty and find new sources of profit. Indeed, faced with a juggernaut like Amazon which is firing all odds with its VOD service Amazon Prime Video, its Dash Button or its Pantry service which shakes up local trade see large distribution, competition must find new tracks to resist.

“Thumbs Up!” is coming slowly but surely.

credit cards

It is perhaps for this reason that the Cdiscount brand is launching “Thumbs Up!” the microcredit service. For the moment, the start takes place in the greatest discretion, the communication being made only by email to customers who have paid for their purchases in 4X and who have not had a payment incident.

This method of financing, little known in France, initially allowed people often excluded from conventional credit, to borrow a small sum to carry out an important project with a repayment adapted to their situation.

Any resemblance to a credit would be fortuitous …

As Mr Steven of the Company said: “it is not because you have no money that we will not take it anyway”. Cdiscount and its financial partner Cream Lending Bank seem to want to take up the concept of microcredit, but without the “social” side. For this, they offer its selected customers (with an appetite for split payment), a credit of $ 200 to $ 1,500 repayable in 4X. Why only in 4X you will say to me, and well for a regulatory reason because with 3 monthly payments maximum, the regulation on the consumer credit, known under the name of law Scrivener 1, does not apply.

So for the e-merchant, this greatly simplifies the processing of the file: a RIB, an identity document and that’s it. No questionnaire on the resources and expenses of the borrower candidate, no calculation of the debt ratio or the remainder of the living, just a query of the Personal Credit Repayment Incident File (FICP) just in case.

Credit is as easy as a click of the mouse.

What about the consumer? As the “Thumbs Up!” website claims, simplicity prevails and brings microcredit into the era of impulse buying. This also surfs on these workarounds in the banking sector, perceived as restrictive and fussy, as the Nickel account subscribed at the tobacconist. Simplicity is the alpha and omega of modern consumption: “one click and it’s automatic”. However, simplicity comes at a cost with an interest rate close to 18%.

Microcredit not really discount.

money loans

An interest rate which can be problematic, even if the financing is on a very short term, for a fragile public, and perhaps at the gates of over-indebtedness. One thing is certain, for the merchant site the operation is very profitable because in addition to a loan with a rate close to the rate of wear (set by the Best Bank at 20.27% for Q2 2017), c is also the opportunity to finance purchases made on another commercial site.

This fervent clientele adept at promotions, easy purchases and split payments is likely to succumb to this siren song. Let us hope that this diversification and loyalty-building operation will be accompanied by great vigilance on the part of the distributor and its financial partner to avoid any deviations with disastrous consequences.

Lightning credits for the self-employed

Most providers only give lightning loans to employed borrowers and not to the self-employed. However, taking out a quick loan for this group of people is not entirely out of the question. One reason for the hesitant lending of lightning to self-employed and freelancers is that this group of people can partly provide information about their own income according to their own assessments and can also easily gloss over it.

What is a lightning credit?

What is a lightning credit?

In the case of a lightning credit, the money applied for is paid out within two bank working days. The prerequisite is that the borrower submits his completed loan application by the time specified by the bank and has the Postident procedure carried out at any post office. If the loan is granted by a bank registered in Luxembourg, the processing period can be shortened to one banking day, since in this case the fax copy of the ID card is sufficient as proof of identity for normal loan amounts.

The quick payout of a lightning loan is associated with higher interest rates compared to loans with longer processing times. Credit customers willingly pay an appropriately high interest premium for quick processing, but this must not be too high.

How do self-employed get a lightning credit?

How do self-employed get a lightning credit?

The rapid processing of a lightning credit means that the information in the loan application cannot be checked. Consequently, many lenders refrain from submitting proof of earnings for lightning loans, so that the self-employed in the loan application state their average income without reference to their employment relationship. With this procedure, applications for lightning credits for the self-employed are regularly approved, however the applicant violates his obligation to provide correct information in the loan application.

This procedure becomes problematic if the subsequent loan repayment does not take place as agreed and the lender carries out a subsequent check of the lending. In this case, he may immediately reclaim the loan paid out under false pretenses. If repayment is correct, the incorrect information in the loan application is also illegal, even if the bank is unlikely to perceive the incorrectly completed order as such.

The better solution

The better solution

The honest and at the same time better solution is to search intensively for the self-employed. A few lenders explicitly accept self-employed and freelancers as credit customers, so that they can take out a lightning loan from them.

In addition to processing the loan via the Internet, which is common for fast loans, lightning loans for the self-employed can also be applied for in a bank branch. In their statutes, regionally oriented Volks- and Raiffeisen banks and savings banks have expressly committed themselves to promoting the local economy, including the self-employed and freelancers. Lightning credits for the self-employed are mainly available online for entrepreneurs who have been self-employed for at least three years.