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What You Need to Know About Faraja, The Buy Now Pay Later Service for Lipa Na M-Pesa

Faraja for Lipa na MpESA

Safaricom has today announced a new partnership with EDOMx that has seen the launch of Faraja. With this new service, businesses on Lipa Na M-Pesa will be able to offer “Buy Now Pay Later” (BNPL)  options to customers. We have seen a rise in the number of BNPL services in Kenya. The well known one being Lipa Later. The company has had huge success and last year it acquired struggling e-commerce platform, SkyGarden.

With the success of this business model, I always wondered why Safaricom did not try its luck. The company already has a number of businesses and individuals using M-pesa and it is in a better position to run with this idea. 

Well, it looks like Faraja will be the answer according to the company.

Zero Interest

Faraja will allow customers to make purchases ranging from Ksh 20 to Ksh 100,000 at Zero interest. Customers have 30 days to complete payment. This is different from most of the other BNPL products we have on the market that charge interest but they also allow longer repayment periods. Faraja looks like a service to use if you need something but do not have the cash but you are confident that you will get the cash in less than 30 days. 

It is still not clear what will happen to you if you fail to repay. My guess guess is your limit will be lowered.

How to access Faraja

Interested customers can access the service at businesses that offer Faraja by dialing *799# to opt-in or make payments. The service can also be accessed through the Faraja mini-app on the M-Pesa app. 

To register for Faraja, one must have been an active M-Pesa subscriber for at least 6 months before the registration date. Faraja also partners with regulated banks to offer the service. Users agree to the opening of a virtual bank account for Faraja purposes if they are not already a customer of the bank.

Safaricom shares users’ personal information, including phone number, name, date of birth, ID or passport number, and usage data, with Faraja to fulfill Know Your Customer (KYC) requirements.

Multiple items can be purchased under Faraja as long as the customer is within the assigned credit limit. 

Faraja Credit Limit and Credit Scoring

Before using the service, users are given a Credit that is determined and communicated by Faraja. This limit changes over time depending on a user’s credit score. The credit score is based on a number of factors including transaction history and external sources. We are not sure what these external sources are but my guess may be it includes CRB status check etc. 

Designed to Help Businesses Grow

Faraja’s main aim is to help businesses grow their sales by allowing customers to make purchases when needed and pay later. This is perfect in situations where sales are lost due to lack of funds at the time of purchase.

Businesses on Lipa Na M-pesa can opt-in to Faraja by visiting or contacting EDOMx. This service has already rolled out to a number of outlets including Naivas and Goodlife pharmacies. 

There is no risk to businesses for using Faraja as they do receive immediate payments in full for products and services when a customer makes a purchase using the service. If this is the case and with Zero interest, I can’t help but wonder, what is the incentive for EDOmx? What do they get from this? I know Safaricom benefits as more people use M-pesa, but what about EDOMx?

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