Former Google CIO Douglas Merrill Wants To Reform Payday Loans With ZestCash – TechCrunch
With over 60 million Americans considered “underbanked,” meaning they don’t have access to credit or conventional banks, a plethora of businesses have sprung up to help serve this community better. thanks to technology. Green Point, Pay nearby and others all offer banking options to the underbanked. Today, former chief IT officer of Google and vice president of engineering Douglas merrill today launches a new product, called ZestCash, serving the underbanked which aims to legitimize the payday lending industry.
Payday loans are common among consumers who do not have the credit to take out a standard loan from a bank. The payday loan stores allow users to pay a fee for borrowing a certain amount of money. For example, an average consumer will pay $ 60 to borrow $ 300 for 14 days. After 2 weeks, the borrower must repay the entire loan and fees in one lump sum. If the borrower cannot repay the loan, they can get an extension but will have to pay an additional $ 60 for the additional term. ZestCash reports that the average payday loan is renewed 6 times, which means the average borrower pays $ 420 in fees to borrow $ 300 in principal. Last year alone, 30 million Americans took out a payday loan.
ZestCash wants to offer a better alternative to those who are forced to take out these immediate loans. With ZestCash, borrowers choose how much money they want to borrow and for how long. As they choose their loan terms, the company clearly displays their weekly payment, allowing users to adjust the terms to come up with a manageable payment for them. Instead of paying off the money in one lump sum, borrowers can pay off their loans in small chunks over time.
For now, ZestCash has a loan limit of $ 500, but that could expand in the future. Additionally, ZestCash will be available in Utah and will slowly expand to other states in the United States over the next year or so. In terms of payments, ZestCash will automatically debit people’s accounts on the dates their payments are scheduled. And while most payday loans are processed in physical stores, ZestCash only works online. When a person takes out a loan, they also get a full payment schedule showing when each payment will be taken from their account. The startup also promises flexibility when dealing with individual borrowers and late payments.
While Merrill, who left Google in 2008 for the music giant EMI Group, strengthened the technology of ZestCash, its co-founder and chief risk officer of the enterprise, Shawn budde, participates in the animation of the banking part of the platform. Budde served as Senior Credit Manager at Capital One and managed its subprime credit card business with revenues in excess of $ 1 billion.
It’s hard not to be optimistic about a service that tries to legitimize services for the underbanked. And as we have seen with the insane success of Green Point, it can also be a profitable business.