Comment by konschubert | Hacker News Reader

Comment by konschubert | Hacker News Reader

This is going to be a negative comment, I’m sorry in case I’m misunderstanding things.

I wonder how big the set of people is for whom it holds that:

1. Income > Expenses

2. They make good financial decisions

3. They decide they need a small loan

You’ll always have a selection bias towards people who do 3, but not 2 or 1. Thus you’ll be forced to price the high default rate into your product or use predatory practices to squeeze peoples payments when they cannot afford them.

> We are looking to build a product that isn't predatory towards the people that need help the most.

I think the main problem with small loans is that they are almost never used for investment. They are used to buy stuff for consumption.

If you’re just barely cash flow positive, buying a TV on credit is not a good long term choice, and the loan that enables it feels predatory.

Last, I am not sure if giving up all privacy is the kind of “future of credit” that we should applaud.

Hey konschubert, first off thanks for your feedback and poking holes into our product, it really helps us with our planning especially in the early stages of our company.

We are building this product as an alternative to what exists in the the market today. One of the problems we solve with not giving cash to the consumers like alternative lenders is that we can kind of control where the money is spent. Illicit goods have to be purchased with cash and with a card method, our consumers will be spending with reputable retailers where CCs are accepted.

Another problem is that the primary method for these consumers to solve their money issues include loans and credit cards with high interest rates, fees that make money when a consumer carries a balance. With our 30 day payback, we want to make sure those fees don’t happen, we strictly want to focus on monetizing through the interchange fee and once we grow, partner offers similar to how seated and freebird work. Also, regarding the limits, since we have transparency into their bank accounts, we will grant limits that are within the means of being paid back by our users.

Lastly, regarding the privacy issue, totally understand that point of view. This card is built for someone that has no other option because they are new or have bad credit. We want to bring them into a world of manageable credit that helps them grow into the next level of cards whether that is with us or another company.

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