WIPAY chief executive, Aldwyn Wayne, says the T&T-based payment platform company, has been planning its latest innovation, called WiLoan, for more than a year.
WiPay received a moneylender’s licence in November 2019 and has been actively planning WiLoan since then and is ready to start lending money from December 1, said Wayne.
But not to the general public: the company will start accepting applications for its unsecured, personal loans from registered members of the National Trade Union Centre (Natuc) only, as the partnership between the conglomeration of trade unions and the payment company is a pilot project.
“Natuc has 60,000 members, so before we offer WiLoan to the public, we want to test it out, we want to iron out the kinks. But beyond testing it, we wanted an environment where, in testing it, there would be room to grow,” Wayne said.
The basis of WiLoan is that companies must agree to provide salary deductions for their employees, who must work at a company for which a Natuc trade union represents the workers.
“Our loans are based on the fact that you must have a job and you would set up a monthly deduction from your salary,” Wayne said.
The tech executive said Natuc is the perfect choice for a partnership with WiPay for the unsecured loan pilot project “because their trade unions represent working class members who are currently feeling the effects of Covid-19 the most. We wanted to make sure that if we were bringing a solution to the market, it would actually help the market.” He added that the workers who need the WiLoan facility between paycheques would be the working class.
The interest rate on the loans for the pilot project is between 2 per cent and 2.75 per cent, based on the length of time the recipient chooses to pay back the loan.
If the borrower opts to pay back the loan in five months, which is the maximum period allowed, the rate would be 2 per cent. If the borrower opts to repay the loan in one month, the interest rate would be 2.75 per cent. WiPay and Natuc are offering workers a maximum of $5,000.
“These numbers apply only to the pilot project and are subject to change when we go outside the pilot,” Wayne emphasised.
As an example, Wayne agreed that if a Natuc member borrowed $5,000 and agreed to repay that amount in five months, the interest would total 10 per cent and the member would be required to pay back $5,500 at $1,100 a month.
Questioned about the reputation of payday lenders in North American, Wayne stressed the difference between what WiPay is offering and what is offered up north.
“This is completely different from a payday loan in the United States. In the US, they give you a loan up until payday with crazy interest rates for that one month. There, it is beyond predatory lending as a borrower there could end up paying 48 or 50 per cent.”
He said the purpose of the partnership is not to become “one of those solutions that is already in the market, where you pay these high interest rates”.
The operational costs of WiLoan are reduced because the company is leveraging its payments technology and its platform.
“Because WiPay’s platform already exists and because the onboarding procedures have been vetted and have won four awards, we have already taken that first step of getting the customer on board,” said Wayne. “The work would be the salary deductions and the partnership with Natuc removes that element from WiPay.”
Source of funds
Asked where the initial money is going to come from to lend to the Natuc members during the pilot, the Point Fortin businessman said: “The money is coming from the shareholders capital of the WiPay company. It would be shareholders’ money.” He explained that the moneylenders’ licence stipulates that the money being lent must come from the lender. This means the moneylender cannot take money owed by borrower A and lend it to borrower B.
WiPay’s Payment Solutions moneylender’s licence is for $5 million.
Wayne said: “We know the demand for the unsecured personal loans is going to baloon beyond $5 million when we go out to the public. Moving beyond the pilot project, what we have in mind is that we would partner with three credit unions and redirect the loans to them...
“Moving forward with WiLoan, we do not intend going deep into the loan business. We are going to act as an aggregator and as an agent for credit unions.”
Wayne also emphasised that the thinking behind the pilot project is not to make a profit from the loans, but to ensure there is cost recovery for the platform and the onboarding and that the WiPay shareholders recover their initial funding.
When WiLoan goes live beyond the pilot project, he said the interest rates are not likely to be outside the 2 per cent to 2.75 per cent range. “What I think we would have is more options and different methods for payments. So different products to fit different types of customers,” the WiPay CEO said.