A Smartphone Can Be the Key to a Better Life: PayJoy

Q: How does PayJoy aim to support financial inclusion in emerging markets? What are the main challenges the company is helping its clients overcome?

A: Our goal is to open up new markets and bridge the financial inclusion gap, and we do this through smartphones. The smartphone is no longer a luxury; it has become a necessity. Many need a smartphone to get a job, access education, stay in touch with family, or even work remotely. A smartphone is a tool that can significantly improve people's lives.

Our founder developed a technology that uses advanced data and mobile phone-enabling technology to allow us to reach those who typically would not have access to credit. Our clients can apply for a loan with just an official ID and a phone number. Our technology leverages data that traditional financial institutions do not typically use to grant loans. This is especially important for first-time borrowers, who make up around 40% of our users.

Q: What kind of data does PayJoy use that traditional companies do not? 

A: PayJoy uses proprietary predictive AI technology and processes around 100 data points, including geolocation, for fraud screening and risk profiling. The data is processed through an algorithm that uses ML and data intelligence to calculate the probability of repayment. Based on this calculation, we offer each customer a tailored credit offer. Unlike traditional lenders, we do not use data like family references or solely focus on credit history. We have approved loans for people without any credit history or even those with past credit issues, tailoring the offer based on their risk profile. In Mexico, we approve around 98% of applicants.

Q: How does PayJoy ensure affordability and transparency in its lending practices for consumers with limited financial histories?

A: Transparency is one of our core principles. From the beginning, the customer knows the exact amount they are approved for and the repayment terms. For higher-risk customers, we may offer shorter terms for the first loan, but as they demonstrate reliability through payments, they can extend their loan terms in subsequent loans. Our return rate is high, as customers come back for additional loans, often with better conditions and lower costs.

We assess each customer individually, based on their ability to repay. If a customer has a high repayment capacity, they receive higher loan offers; if not, we adjust the offer accordingly. The key is not to burden the customer with debt they cannot manage. 

Q: What strategies do you use to retain customers and ensure they continue using your services instead of moving to another company?

A: One of the main factors that sets us apart is that we do not charge late payment fees. Even if they are three months behind, their debt remains the same. This is a major differentiator from other companies that serve similar markets, where missed payments often result in ballooning debt.

We start with the assumption that customers do not default because they do not want to pay, but because they cannot. In our model, if someone misses a payment, their phone gets disabled, but it can still be used for emergency calls and to contact customer service. The customer only needs to catch up with their missed payment to reactivate the phone.

Q: PayJoy’s customer journey begins by financing a smartphone; how does it evolve from this starting point? 

A: The smartphone is the initial step to bring customers into the financial system, but the journey does not stop there. The smartphone itself, after financing, can serve as collateral for future loans, enabling the customer to access other financial products like a credit line or a credit card. This opens up new possibilities for purchases and online transactions.

Our goal is to gradually introduce customers to more financial products, always ensuring that their experience is user-friendly and frictionless. We invest heavily in technology and customer service to make sure our processes are as smooth as possible, and that the customer journey remains simple and accessible.

Q: How do you maintain a seamless customer experience, and what role does customer feedback play in that?

A: Technology and customer service are two of our largest teams, and we invest significantly in tools to manage the high volume of transactions we handle. We gather real-time feedback from the point of sale, through direct contact with our system, and from customer feedback. This allows us to understand the reasons behind customer behavior.

We can then act on this data quickly. This real-time insight is one of the factors that make us unique. We also emphasize trust — our customers know that we listen to them and respond to their needs. For example, during the natural disaster caused by Hurricane Otis, many of our customers in Guerrero lost access to payment terminals and electricity, so we proactively extended payment deadlines without anyone having to request them.

Q: How does PayJoy’s financial inclusion model empower individuals who are usually excluded from the system?

A: Our core belief is that a smartphone can be the key to greater access to technology and, in turn, a better life. Our mission is to reach those who lack access to traditional financial services. We believe that when people are given the opportunity to improve their lives, they will take it and make the most of it, as 75% of our interviewed clients have said. PayJoy’s technology allows us to democratize access to credit, offering people the tools they need to thrive. It is all about opening doors for those who have been left out, and we are constantly looking for ways to bring more people into the financial system and help them succeed.

PayJoy is a financing company that focuses on emerging markets. It uses mobile technology to help its clients have easier access to credit.