TymeBank tiptoes into loans – Moneyweb
TymeBank, the bank owned by African Rainbow Capital (ARC), has launched its first credit product, MoreTyme. The bank says the product offers “interest-free purchases,” with customers paying half the price at the point of sale of partner retailers and the rest in two equal installments over two months. This is no different from services like Mobicred and Payflex, which offer step-by-step shopping, but only for online merchants.
The Covid-19 pandemic and associated lockdowns ended TymeBank’s initial plan to launch a standard unsecured loan product to customers in 2020. He had experienced this before the hard lockdown began.
In June, ARC Investments told the market that “management is exercising great caution in the context of a difficult economic environment” with respect to its “lending business, and more specifically its proposal for unsecured loans to investors. clients”. He added that “the bank is considering alternative credit products that do not carry the same long-term risk as an unsecured term loan.”
In December, he said he “plans to enter the market with innovative loan products in the first half of 2021”.
TymeBank launched MoreTyme with two partners, Pick n Pay and NWJ. The bank offers an example of a purchase worth 4,000 rand. A customer will create a MoreTyme payment voucher in their banking app, which will settle the total amount due at checkout. An amount of R2,000 is immediately withdrawn from their account. Two more payments of 1000 R1 are then debited from their account 30 days and 60 days after purchase.
The amount available to spend on MoreTyme is dynamic, and the overall limit is approximately double their current EveryDay account balance. Frequent use, savings through Goalsave, and transferring their salary to a TymeBank account will usually increase the client’s limit. They can have more than one active purchase at a time, as long as their overall limit is not exceeded.
TymeBank will make money from late / missed payments.
He charges an R65 fee for any late payment, and says “the purchase will then become an ancillary credit agreement.”
In the terms and conditions of its products, it states that interest will be charged at 2% per month on the overdue amount.
The bank also has the right to deduct the amount owed the next time funds, including salary, are deposited into a late customer’s account.
In some ways, this installment payment mechanism is similar to buying in-store, but it differs in that customers can take their purchases with them immediately. Educating the market on how it actually works will be a challenge, but it is similar to the very popular advanced airtime products offered by most of the major mobile carriers.
The plan was always for TymeBank to go beyond earning income from transaction fees. Interest income will increasingly contribute to the bank’s income as it launches credit products. He also sees insurance as part of this mix.
ARC Investments said in December that the bank had “entered into a bancassurance partnership and is piloting a second bancassurance partnership which will allow TymeBank to provide a wider range of products to its customers.”
It currently offers funeral cover through a Family Protect policy taken out by Hollard. Leveraging its relationship with Pick n Pay, TymeBank offers a grocery store benefit as part of the policy, which is determined by the retailer’s average spend over the previous three months.
At the end of November, TymeBank had 2.5 million customers, of whom “about 1.5 million were actively using their accounts.”