Did Betfair Lay Down The Model For Social Lenders?
Zopa, Funding Circle and Ratesetter, think they are unique, but did they just borrow the principle from the betting exchange, Betfair.
In all four, you can play both sides against each other, although the purpose of Betfair is different.
The same principles could also be applied to an energy exchange. Let’s say a town or an area got together and pooled their energy needs and say they wanted a particular price, which the energy suppliers could then bid for.
I don’t see too much difference.
Birthday Charity Giving
I’ve had some more positive responses on my idea for giving to charity on your birthday, which I outlined here.
It just seems to hit a chord with people, to give to celebrate another year of life, hopefully well-lived.
So I’ve now given it a name of Birthday Charity Giving. It was the only sensible name I could think using the first letters of the names of my wife, son and the late company accountant, who set me up with the good pension I enjoy.
Creating A Ratesetter Account
I have just created a Ratesetter account, as I want to see how other peer-to-peer lending sites work.
As a Zopa user for many years, I could be considered biased, but although I got registered quickly, there are some things I liked and didn’t.
E-Mail Address Based Account
All accounts, should be based on e-mail addresses. They are in Ratesetter.
Passwords
Because of my gammy left hand, I don’t like passwords where case is important, as I often get it wrong, when I use the shift key. Ratesetter insists on at least one number.
At least though they didn’t use the dreaded Captcha system beloved of so many sites.
Check Questions
They only have one question, which you setup yourself. I’m happy with that.
Addresses
I had no problems here and they only wanted my current one.
Debit Cards and Bank Transfers
Ratesetter allow both methods of transferring money to the account. I prefer the bank transfer.
But I did successfully register my account and transfer £1,000 into the account.
Kiva – On-Line Microfinance
Kiva is almost a cross between peer-to-peer lending and micro-finance.
You choose an entrepreneur with a business in some faraway country, who needs some finance to either start or expand their business. The business might be a recycling business in Pakistan or a cafe in Vietnam, but the list is endless. You then contribute something like $25 to the loan they require.
The About page on their web site tells you more. I just signed up and then lent $25 through my PayPal account to a pharmacy in the Congo to buy more drugs. Of the pukka sort that is! It was a very simple process, where you just sign in and then start lending in chunks of $25 to those borrowers you choose from a map of the world. I have since made a loan to a woman starting a restaurant in Ecuador. I chose Ecuador, as I have experience of the country, so know a bit about the way they work.
So far they claim they have lent over $337 million dollars and they have a near 99% repayment rate.
I regard any money, I give to Kiva as a donation to charity. If I get any money back, then that is a bonus. If I get all my money back with interest, then that’s an investment.
I think the big disadvantage of Kiva is that it appears you have to pay by PayPal or a credit card, whereas Zopa or funding Circle can be fed using a direct bank transfer.
Perhaps if you’ve had a clear-out and got rid of unwanted clutter through eBay, Kiva is a good way to spend your PayPal funds creatively.
Remember too, that most of our charity donations are either made by cash or credit card, often through something like JustGiving. A lot of these will be increased by Gift Aid.
Regular Charity Donation
There are some charities I support and others I don’t. For instance as someone who has lost his wife and son to cancer, anything with cancer or loss in it, gets my consideration. On the other hand charities who use chuggers don’t. You will see from the links on the blog, a couple of the charities that I currently support.
So I had this idea to set up a suitable payment for all of these and other charities every year on my birthday, which just happens to be in a few days time. The advantage as I see it, is that because of the payment date they will be easy to find, modify and if necessary remove.
I have chosen to do it on my birthday, as that is a good psychological day for me. I suspect it is for others too! There is also this feeling that you’ve made another year, so perhaps these payments are your present to say thanks for still being here.
I will of course know that on my birthday, I better have a certain amount in my bank account. But then a reminder on my computer for say the first of August every year, would cure that.
I also feel that say £50 each year for ten years is probably better than £500 one year and then a whole lot of aggro as the charity tries to get more.
When in the future I pop my clogs, it will also be easy for my executors to sort out my charity payments. Especially if you put a little note in your will, explaining the payments. I think a good solicitor could write a nice clause for a will saying that some of the estate would be distributed to various charities in proportion to the birthday standing orders.
Since I wrote this piece originally, I’ve set up two of these charity payments.
One was for a small charity and all I needed was their bank account number and bank sort code.
For a national charity, I actually chose them from a list on Nationwide’s on-line computer system.
My only worry is that the charities get the Gift Aid right!
But let’s face it, bankers have had a lot of bad publicity lately and perhaps putting a Gift Aid check box, when you choose a charity from their list can’t be the world’s most difficult programming task.
I would welcome the views of anybody involved in charity fund raising.
Creating A Funding Circle Account
I have just created a Funding Circle account, as I want to see how other peer-to-peer lending sites work.
As a Zopa user for many years, I could be considered biased, but although I got registered quickly, there are some things I liked and didn’t.
E-Mail Address Based Account
All accounts, should be based on e-mail addresses. They are in Funding Circle.
Passwords
Because of my gammy left hand, I don’t like passwords where case is important, as I often get it wrong, when I use the shift key. Funding Circle insists on at least one Capital letter and one number.
At least though they didn’t use the dreaded Captcha system beloved of so many sites.
Check Questions
They did have, who was my best friend at school as a check question. This is a question, that I don’t really have an answer to, because I had a bad time at school with personal relationships.
Addresses
Because I’ve only been at my current address for less than two years, I was asked to enter my previous address. I made a mistake and ended up with the wrong address in my profile. I was able to change it easily to the correct one.
Debit Cards
The first investment was by debit card, which brought up the dreaded Verified-by-Visa system. I would prefer to use a Direct Debit or a Bank Transfer. Especially as fake Verified-by-Visa e-mails are being used by fraudsters.
But I did successfully register my account and transfer £1,000 into the account.
The Cheek Of It
Any establishment that displays a sign like this one on the Olympic Park, doesn’t get my custom.
The Cheek Of It
It didn’t!
Peer-to-Peer Lending Has A Record July
This article from This Is Money has the story and it seems the banks competence and behaviour is to blame. I can’t see the banks improving their ratings for a month or so, so that must be good for the social lenders.
Is There A Case For A mini-Peer-to-Peer Lender?
By all accounts, the lender of last resort, Wonga, is successful, despite the fact that it lends money at extortionate rates to those who shouldn’t really be borrowing money. On the other hand, the major peer-to-peer lenders, like Zopa, Funding Circle and Ratesetter, go from strength-to-strength and continue to gain plaudits from financial commentators.
If the peer-to-peer lenders have a problem, it is the perceived entry level, where potential investors like the concept, but are put off by not wanting to put several thousand pounds at risk.
So could the parameters of the peer-to-peer model be modified to borrow smaller amounts and lend it to out in dribs and drabs as payday loans?
I’m not sure, but it would be a much more ethical way of satisfying the market and possibly educating the borrowers as well.
You’re probably venturing very close to a completely automated credit union.
Now Nationwide Drops A Clanger
According to this report on the BBC and a message on their site, Nationwide have processed debit card transactions twice. It didn’t affect me, as I only use a debit card to get money from a cash machine.
This should never happen.
I have said that processing and senior management should be co-located and preferably at the same place where the programmers work.
As in this Nationwide clanger over 700,000 accounts were affected, it is quite likely that several senior managers or their friends would have been effected by the error. If those managers were worth employing, they should have been straight on to those responsible to find out what had happened. Co-location puts the fear of God into operators and programmers. Try doing that if they’re halfway around the world.
But at least in this clanger, Nationwide found out what had happened quickly and rectified it within 48 hours. But how much did the whole incident cost Nationwide and its customers? And as Nationwide is a mutual, how much did it indirectly cost its members?
I always remember Bob, the guy who taught me cost accounting, said that banks had a totally different approach to the way things added up. Perhaps things haven’t changed all that much!
The Anonymous Widower 