There aren’t many areas of modern daily life that financial technology can’t reach into and change. Most commonly for consumers, financial technology is changing the way consumers spend their hard-earned money.
Fintechreviews.co.uk reports on Activehours, the payday lending app that has its eyes set on payday lenders and other types of traditional lending like overdrafts.
If a customer has an unexpected bill, car repair or any other unexpected cost, they can borrow up to $100 from their next paycheck from Activehours. This money can be accessed immediately after a shift has ended, making the whole process quick and easy.
Interest-free lending
One of the factors that makeActivehours most exciting here at fintechreviews.co.uk is that no interest is required to be paid on their small loans.
So, how does Activehours make its money? The simple answer is through the consumer’s generosity. Activehours relies on a tipping system. When a customer pays back the money, they choose if they would like to add a little extra for the company’s service.
At first, this sounds like it wouldn’t work, but according to the company’s CEO Ram Palaniappan, customers are indeed tipping.
One big advantage the app has over traditional payday lending is that the amount, time period and even the interest is controlled by the user, putting the power into the user’s hands.
Activehours loans don’t require a social security number or credit rating, making this service accessible to most people with a job and a checking account.
Investors putting their faith in Activehours
The company has been receiving investments since its foundation in 2013, starting with $4.1 million in seed funding. In January this year, the company raised $22 million in series A funding, and just last month, Activehours raised $39 million to expand its operations.
Led by Andreessen Horowitz and Activehoursearly-stage investors, Matrix Partners, Ribbit Capital and March Capital Partners, the company has managed to raise nearly $65 million since its launch.
Americans pay $32 billion in bank overdraft fees and $9 billion in payday lending fees, so it’s clear that the demand is there for a newer alternative to traditional lending that Activehours can possibly provide.
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