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Friday, February 25, 2022

Embracing embedded financing by Nigerian telecom consumers – ITREALMS

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Having lost his two phones and a HP laptop to ‘break and enter’ thieves recently, Femi, a resident of Ipaja, a Lagos suburb, headed to the Computer Village, Ikeja. REMMY NWEKE writes on Femi’s encounter and embrace of the embedded financing package to replace his lost devices with ease.
Devastated penultimate morning, Femi walked into one of the mobile phone shops, SLOT, at the Ikeja Computer Village, Lagos, to replace his stolen mobile phones and HP laptop, upon realizing they got missing from his window at his residence in Ipaja, a suburb of the commercial city.
*Some embedded finance service providers
Considering Femi just finished paying the school fees of his two children in a nearby private school and now faced with replacement of his work tool mobile devices as a content creator in upcoming firm, he was at first confused when approached by a sales girl, Nkiru, with an offer that he can actually pick a mobile phone or two and pay later.
Femi was still wondering when she explained that he can also replace his phones now from Slot Nigeria and pay later through monthly instalments over a given period, just as Femi could trade his old smartphones for a new one but not exceeding six months plan. Stressing that this package of buy now and pay later has installment repayment plans covering smartphones, accessories, laptops, amidst other electronic mobile devices.

ITREALMS gathered, this credit facility known in the financial circle as ‘embedded financing’ or ‘Banking as a service’ (BaaS) is a new kind of credit instrument making a wave in the small and medium enterprises in Nigeria and is most suitable for working class whose salaries come at month end. In fact, part of the criteria by some of the embedded financial service providers is the presentation of a post-dated cheques dully signed or a standing order to one’s bank giving instructions for repayment plan by a set date for the duration of the credit facility.

Experts at Wikipedia have defined ‘embedded finance’ as an all-in-one addition of financial services adopted by non-financial companies, especially retailers, which enable them to embed financial lending services onto their platforms or services, thus offering customers the option to have a fragmented refund plan, often on monthly instalments.

ITREALMS gathered, for instance, that if Femi who is on N80,000 monthly salary bearing every other expenses, could afford to replace any of his mobile phones at a price of N18,000 with first instalment not below N6,000 and the rest of N12,000 spread over three months, hence, monthly, Femi’s bank would remit the sum of N4,000 only to the embedded finance provider. Aside SLOT there are several service providers including Konga, Jumia, and Justfones among others.

Ultimately, that was how Femi replaced his mobile phones with same brand, and get going easily and excited as if nothing really happened except for his laptop to be sorted on another date. Although for some embedded financial service providers, there are set limits including that a customer may not take more than a given threshold or product above certain amount of credit facility at a go.

Major beauty of embedded financing to Nigerians embrace to retails and eCommerce is that customers finally repay in full without financial fees upfront or interest.

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