Wonga Goes From Strength To Strength Internationally
Say what you will about payday loans, but millions of people the world over use them. Most of them are used for the intended purpose – to cover a shortfall in cash until their next payday – and for those people, they act as a way of avoiding potential financial difficulty in the longer term.
The industry has grown rapidly since roughly 2006, with many providers joining the market. One of the original (and most successful) providers, Wonga, have expanded moved into the South African market with great success.
Payday lending – what is it?
Payday lending originated in the USA and is a form of finance providing short term loans for small amounts. These funds are intended to cover shortfall in finance between one payday and the next.
They usually come with a large APR that has drawn criticism in the past, although the lenders argue that using the total cost is more realistic than using the APR. It is also argued that payday lenders allow people who are refused loans elsewhere due to poor credit rating the chance to take out finance to help them through difficult times, and that their rates are always readily available to the public.
The market has expanded beyond the UK and the USA. Now a global business, some of the very first companies to launch in the UK have grown to include markets in Europe and further afield.
The growth of Wonga
Wonga.com was the brainchild of South African entrepreneur Errol Damelin. He launched the company in 2007 in the UK, and quickly grew to become one of the largest providers of payday loans. It quickly expanded, opening offices in Poland and Germany and now, perhaps understandably given their origins; South Africa.
Wonga was the first to use an entirely automated technology for risk processing and decision making for applicants, leading to it being known for providing fast results for those applying online. Available from PC, tablet or smartphone, its innovative website and apps made it useful for people who want to avoid long processing delays in applying for finance, and without having to speak to lenders face-to-face.
It has won a number of awards over the years, including The Guardian Digital Innovation Digital Entrepreneur Award in 2011. It has also sponsored football teams such as Newcastle United and Blackpool FC, as well as quiz shows on TV.
In 2013, Wonga purchased Spanish short-term loan provider, Credito Pocket, a move that would give it its first foothold in the region. After a short period of time it rebranded as Wonga Spain, and looks set to continue to grow, making it one of the largest global providers of payday and short-term loans. The growing customer base in South Africa shows just how far Wonga has progressed over the years.
It seems like the market for such loans is here to stay, particularly as global economies struggle to recover from the recent recession and workers find the cost of living rising faster than wages. As with all kinds of lending, it is important to note the APR and to ensure affordability before taking out any credit.