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Why consumers now prefer product purchase in installments against cash first payment

Why consumers now prefer product purchase in installments against cash first payment

Demand for Pay-As-You-Go financing for products in the East African Market is set to skyrocket in 2022  as more consumers opt for alternative payment solutions as opposed to cash first payment.

Data from Angaza, provider of sales and customer management technology for last-mile distributors, shows that despite an increase in demand for sophisticated products like smartphones and TVs, the majority of consumers are unable to pay for these items upfront.

The Angaza Customer Success Director Peter Thuo says the Pay-As-You-Go model shows great potential to help consumers in emerging markets access products they previously could not afford through flexible payment terms.

“Pay-as-you-go (PAYGo) financing has in the past been used to help more low-income consumers in emerging markets access basic services. We are now seeing a paradigm shift as more middle income earners are seeking this financing model in a bid to access more sophisticated durable products like smartphones, TVs and fridges that they cannot pay for upfront.”

The model also supports distribution businesses in selling any product to reflect their consumers’ unique needs.

With the financing model, consumers who cannot afford to pay for a product upfront can choose to pay a distributor in partial, affordable installments over an agreed period of time.

These partial payments are either made until the product is paid off and the consumer owns the product or on a continuous basis. In the case of a metered product, if the consumer fails to make an installment payment, the product can be configured to automatically shut down until payment is made.

The firm has so far partnered with over 60 mobile money providers across 25 countries to make payments for products convenient for consumers and to enable cashless operations for distributors.

Last year the firm received Sh1.3 billion in Series B financing to support efforts to scale customer service and commercial business teams, primarily located in Nairobi, Kenya.

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