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How do you distribute funds and receive payments on loans? The reason some of your competitors use local banks is because it is extremely difficult to manage loans in some parts of the world and it requires boots on the ground. How do you address this difficulty?

Hi pilom, It was extremely difficult to send payments to individuals in pretty much all developing countries until about five years ago. Since then, mobile phone payment services, which allow funds to be sent via secure SMS message, have proliferated in a few countries, especially in Africa.

Kenya is at the center of the mobile phone payment revolution with its M-PESA service, and is the reason Zidisha was first piloted in Kenya. Thanks to M-PESA, Kenya is still our largest country today.

Most Zidisha loan payments are transferred via mobile phone. For example, we use M-PESA in Kenya to transfer funds from our US bank account electronically to a bank account in Kenya, and from there to the mobile phone M-PESA account of the recipient. The recipient can exchange the M-PESA credits for cash at a local M-PESA kiosk. We receive repayments the same way.

In countries where mobile payment services are less developed, such as Burkina Faso, we transfer payments by sending a disbursement order to the local bank account where our funds are held. This is a much less scalable solution than mobile phone payments, and is one reason our growth is more rapid in the countries - Kenya, Ghana, and Indonesia - where mobile phone-based payments are enabled.

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