Nigerian fintech company Carbon has launched a service that allows users to pay for electronics in installments at zero interest.
Aptly named Carbon zero, the new product comes with some conditions.
It is only available to Carbon customers and must be Nigerian resident salary earners with verifiable income and current bank statements. Additionally, interested customers must earn a minimum monthly salary of 200,000 ((~ $ 526) to be eligible.
Carbon Zero users are required to pay a 20% deposit for the smartphones, laptops, televisions, refrigerators, air conditioners, or game consoles they wish to purchase. The balance is then spread over a period of time that, according to the company, will be around six months.
The Carbon team believes that middle-class earners are better off spreading payments over a number of months rather than making one-off, bulk payments.
So, if a breadwinner wants to buy a new smartphone or PS5 console that she has in mind, she can buy it without worrying too much about the cost of the device putting a strain on her household budget.
With no interest, Carbon wants more middle-income Nigerians to accept installment payments. You want potential customers to consider the option of meeting their immediate needs without incurring the full cost right away.
zero Essentially, Carbon’s core product, digital lending, expands by tying loans to tangible objects and helping their customers to worry less about interest repayments. As with your loan product zero will impose late repayment fees on users. Carbon doesn’t say what the percentage will be.
It remains to be seen how the traction develops zero with a minimum entry point of 200,000. Yele Oyekola, Product Manager for Carbon Zero, says the target audience is young professionals.
“We see customers requesting more than 600,000 yen (~ $ 1,580) worth of items, and we don’t want to mislead customers who we think are struggling,” he told TechCabal.
But he explains that because of this gentle launch, the product will be opened to more customers, presumably in the lower income brackets.
“Zero’s long-term vision is to be the preferred way for customers to make purchases, and we anticipate a future where every little purchase is made with Zero.”
Setting rather high eligibility criteria helps the company prevent defaults in the early stages of the product.
Oyekola says that Carbon’s risk management model anticipates rare outages with Zero, but that they will work with customers to find solutions that will benefit them in such circumstances.
It will also be interesting to see what Zero does for Carbon’s profitable business. In its most recent financial report, the company reported 2019 after-tax profits of $ 312,905.
Income was primarily based on 975,000 loans worth $ 64.1 million in 2019. The average loan offered to borrowers was $ 65.8 (~ ₦30,000) while transactions such as bill payments and bank transfers were from Carbon wallets were valued at $ 141.7 million.
Carbon has been going in this direction of consumer product finance for some time.
Founded in 2012 as One Credit to provide loans to wage earners in Lagos, it became Paylater in March 2016 and introduced a range of alternative services such as bill payments, airtime purchases and started issuing free credit reports to users.
They changed their brand identity from Paylater to Carbon because it didn’t reflect the entirety of their endeavors; Carbon offers a fee-free account at 2% per year and investment plans of up to 11% per year.
with Zero, The startup aims to evolve its mission of building value-based relationships with users that mitigate the sharp edges of typical lender-borrower engagements.
According to their updated brand identity statement dated April 2019, Carbon has “stands for our claim to go everywhere with you. To be an integral part of your existence and to be versatile enough to change or renew to meet your needs. “
Carbon is committed to expanding its awareness among users, from having a name on a bank statement to having an in-house presence.
Carbon says zero only hosts traders who are registered Nigerian companies. Currently, users are only able to shop for merchants based in Lagos, but the company says partners in other locations will be available.
zero is accessible via the web, but will be integrated into the Carbon app, says Oyekola.