Wow, the practices these 'disruptive startups' are using are pretty much the same as the bad guys in the dystopian cyberpunk novels from the 90s. They read the whole smartphone, including emails, (charging history?), address book and more.

Just a reminder, determining credit-worthiness by looking at social networks has been called digital redlining. http://www.theatlantic.com/technology/archive/2015/09/facebo...

This article is very misleading when it talkes about interest rates.

Look at the pictures of the app on google play, one of the example loans is borrow 3500, repay 3500 + 384 4 weeks later.

That is only 11% 'interest' , but it is over 1 month instead of 1 year as we commonly call interest. So really, the rate is more like 130%+.

This is not radically different than a payday loan which will typically charge 10$-20$ fees per 100$ borrowed.

From the article: "working with International Business Machines Corp". Is this some hot new startup or has IBM actually gone back to branding themselves as such?

Is it just me, or do these "disruptive microlending startups" use basically the same arguments as the usual run of payday lenders to justify what they do?

Payday lenders are mainly awful because they have to include the cost of humans in their interest rates... which makes those rates absolutely awful vs low-transaction-cost-relative-to-capital-size lenders.... Presumably a startup that lends via phone doesn't have this problem :)

Did you see the interest rates cited in the article? Even the lowest of them is more in line with what you'd find on a credit card account than with what you expect to see on a non-revolving loan of the sort these lenders are offering. Their terms also cite transaction fees, which are generally ignored in discussions of interest, but shouldn't be; when amortized over the term of the loan to provide a basis for fair comparison, they tend to drive the cost of the funds in question from merely high to utterly astonishing. (Payday lenders pull a similar trick, using fixed fees rather than a more typical interest calculation to hide the fact that their loans are priced absurdly high by comparison with even the worst of credit cards.)

Granted, when you find yourself in need of emergency funds at short notice, being able to obtain them even at an extractive cost is preferable to being unable to access funds at any price. But this looks to me like a case where the typical SV veneration of entrepreneurship, regardless of context, is being used to draw a veil over the same abusive practices which have given more typical payday lenders such a bad name.

> Did you see the interest rates cited in the article?

Yes. Did you?

article: Branch charges between 6% and 12% interest—based on the borrower’s creditworthiness—and loans are usually repaid between three weeks and six months later... Traditional microlending tends to be far more expensive—interest rates often exceed 25%

So we're talking somewhere between 13% and 19% less interest (a 52% - 76% decrease in interest rate)... which sounds like a large improvement, though I agree it would be nice to see more discussion re: transaction fees.

What am I missing?

Westpac (one of the big 4 banks in Australia) recently added "View contacts" as an Android app permission. Uninstall time.