Ethical fintech hopes to end payday loan debt cycle
A fintech start-up aiming to stamp out payday lending is on trial in Scotland with support from an ethical investment firm.
karma The smartphone app allows employees monthly salary advances with no interest applied, which is in stark contrast to the high interest rates charged by many payday lenders.
Employers enrolled in the app can advance their staff up to £ 300 of their salary to purchase goods and services from retailers such as Tesco, Asda, Morrisons, Waitrose and Amazon.
Karma CEO Minck Hermans said the company hopes to disrupt the payday loan market and combat the damaging effects it has on consumers.
“We have not only built a solution, but we are starting a global movement to disrupt the short-term consumer loan market and eradicate the pain it causes,” he said.
“Employers are rewarded with increased employee productivity and engagement, as well as the recognition that they are doing the right thing; employees have more control over their finances and our business partners are rewarded with more business. Everyone wins, ”added Hermans.
Consumer tests of the application have already been carried out in Scotland with the support of Fortunis Capital. Karma has also been supported but the FCA sandbox program, which tests new products under a regulatory framework.
Justin MacRae, Director of Operations at Fortunis, said Karma will be a perfect fit for Edinburgh’s fintech cluster, which will allow the company to thrive.
“Karma joins the industry accredited fintech cluster in Edinburgh, where he has found a wealth of talent, an open and collaborative environment with the Bayes Center at the University of Edinburgh and a positive response from government groups”, a- he declared.
“With Scotland open to attracting technological investment in the country’s social capital, this is the perfect environment for ethical fintech companies like Karma to flourish,” MacRae insisted.
Ivan McKee, Scottish Minister for Trade, Investment and Innovation, welcomed Karma’s arrival in the country’s fintech cluster.
“Scotland has a global reputation for attracting innovative businesses such as Karma and providing them with the opportunity to grow and prosper. It’s a pleasure to welcome Karma here, especially as a fintech looking to solve a major societal challenge and improve the lives of Scots and the world, ”he said.