TymeBank tiptoes into lending

TymeBank, the bank owned by African Rainbow Capital (ARC), has launched its first credit product, MoreTyme. The bank says the product offers “interest-free shopping”, with customers paying half the price at the till point of partner retailers and the rest in two equal instalments over two months. This is not dissimilar to services such as Mobicred and Payflex, which offer instalment-based shopping, but for e-commerce merchants only.

The Covid-19 pandemic and associated lockdowns put paid to TymeBank’s original plan to launch a standard unsecured lending product to customers in 2020. It had piloted this before the hard lockdown started.

In June, ARC Investments told the market that “management is exercising significant caution in the context of a challenging economic environment” when it comes to its “credit business, and specifically its unsecured lending proposition to customers”. It added the “bank is considering alternative credit products which do not carry the same longer-term risk as an unsecured term loan”.

In December it said it was “planning to enter the market with innovative lending products in the first half of 2021”.

MoreTyme

TymeBank has launched MoreTyme with two partners, Pick n Pay and NWJ. The bank offers an example of a purchase valued at R4 000. A customer will create a MoreTyme payment voucher in their banking app, which will settle the full amount due at the till. An amount of R2 000 comes off their account immediately. Two further payments of R1 000 are then debited from their account at 30 days and 60 days after purchase.

The amount available to spend under MoreTyme is dynamic, and the overall limit is approximately twice the current balance in one’s EveryDay account. Frequent usage, saving via Goalsave and moving their salary to a TymeBank account will generally increase the customer’s limit. They are able to have more than one active purchase at a time, as long as their overall limit is not exceeded.

TymeBank will make money from late/missed payments.

It charges a fee of R65 for any late payment, and says the “purchase will then become an incidental credit agreement”.

In the terms and conditions for its products, it says interest will be charged at 2% per month on the amount in arrears.

The bank also has the right to deduct the amount due the next time any funds, including salary, are paid into the account of a customer in arrears.

In some ways, this mechanic of paying instalments is similar to buying on ‘lay by’, but it differs in that customers are able to take their purchases with them immediately. Educating the market about how this actually works will be a challenge, but it is similar to very popular airtime advance products offered by most of the major mobile operators.

The plan was always for TymeBank to move beyond earning income from just transactional fees. Interest income will be a growing contributor to the bank’s revenue as it launches credit products. It sees insurance as part of this mix as well.

ARC Investments said in December, the bank had “concluded one bancassurance partnership and is in the process of piloting a second bancassurance partnership which will enable TymeBank to provide a broader suite of products to its clients”.

It currently offers funeral cover via a Family Protect policy underwritten by Hollard. Leveraging its relationship with Pick n Pay, TymeBank offers a grocery benefit as part of the policy, which is determined by the average spend at the retailer in the preceding three months.

By the end of November, TymeBank had 2.5 million clients, of which “approximately 1.5 million were actively using their accounts”.