PalmPay’s popularity has grown since its launch in 2019 and the fintech is popular for its quick payment processing. According to Semafor, Palmpay was one of the biggest beneficiaries of Nigeria’s controversial currency redesign policy. But more than that, Palmpay’s digital lending business is wildly popular, with interest rates between 15-30% for payday-type loans. Like most digital lenders, Palmpay’s loans are instant and only needs users to download the app. Yet, as many digital lenders learn, lending is the easy part, ensuring that people repay is where the job gets difficult.
Ethical debt collection remains a concern
Because many digital loans in Nigeria are sub-prime, the lenders often factor the risk into interest pricing. They also often use many unethical practices to try to recover the loans once borrowers default. Most of the tactics revolve around public shaming, calling and texting the contacts of the borrower to pressure them into paying. While writing this article, a PalmPay agent called me to say that someone on my contact list had defaulted on a loan of ₦10,700. They also sent me a picture of said contact to on Whatsapp with the person’s name, phone number, BVN and date of birth. The picture also had the text “wanted criminal.”
On PalmPay’s Facebook and Instagram accounts, hundreds of comments complain about harassment from agents or customer care representatives. This has become so commonplace that the company is now renowned for its savage debt recovery methods on social media than it is for actual loans. Many of the debt recovery methods raise serious concerns about privacy and ethics.
It’s not often that fintech startups make it into viral memes and TikTok videos, but Palmpay, a Chinese-backed digital wallet offering, is the subject of many social media jibes. Most of the joke formats have the same theme: the lengths to which Palmpay agents will go to collect loans from defaulting borrowers. In some videos, the agents are seen stalking, dragging, or even being verbally and physically abusive to these defaulters. The joke format is so popular that social media users create fictional scenarios around those debt collection methods. The social media lore is hard to ignore and two weeks ago, PalmPay released a statement denying the idea that their collection agents harass people.
On PalmPay’s Facebook and Instagram accounts, hundreds of comments complain about harassment from agents or customer care representatives. This has become so commonplace that the company is now renowned for its savage debt recovery methods on social media than it is for actual loans. Many of the debt recovery methods raise serious concerns about privacy and ethics.
The true cost of loans
“I used to see a lot of adverts on my phone for these apps that lend you money for one month or two months that you can pay back with interest, and it had stayed in my mind. I downloaded a couple of them just to see how it was and all they asked for was BVN, address, bank details, pictures, contacts—all these things that seemed basic to me. I didn’t even think of anything wrong that could happen at that time,” she said.
“The interest rate for the loan was about ₦1200 naira which you were supposed to pay back in two weeks. My father had promised to send me money at the end of the month so I was confident that I would repay it. Thinking back now, I should have just gone to my neighbour as my father said to, but I was shy. Going to beg for money is not the easiest thing to do, so I just decided to do it my way. After all, no one would know that my family needed money with PalmPay.” After filling in all the details and granting all the app permissions, Nafisa’s loan application was approved and ₦5000 was paid into her Zenith account. “It was so quick, much more convenient than going to narrate stories to anybody,” she shared.
A complicated repayment process
Twelve days later, her father sent her the money as promised and the first thing Nafisa thought to do was repay her PalmPay loan. That was where her problems started. “My card details were added to my PalmPay profile, and all I needed to do was authorize the repayment and they’d charge from my card. That didn’t work after repeated trials, so I decided to make a transfer to the account number there. I was debited, but it still didn’t reflect on the app.”
She started receiving texts from PalmPay asking her to repay her loan and threatening to call her contacts. Nafisa was frustrated. She kept explaining to the customer care reps who called her that she had repaid the loan, and they always promised to look into it, but she would receive a call from a different customer care rep the next day, telling her to repay her loan. She recalls that one of the reps called her shameless.
“That was one of the worst periods of my life. I had seen what online loan companies do to debtors and I didn’t want it for myself. One day, a strange number sent me a message on Whatsapp with a picture of a family friend, saying that she was a thief and telling me to inform her to repay her loan or else they publish her picture in a newspaper. I didn’t know what I’d do if that was me.”
