Brazilian fintech PicPay announces peer-to-peer lending

According to the regulation of the loan between individuals, the contract cannot exceed the amount of BRL 15,000

PicPay's headquarters, in Sao Paulo. Photo: PicPay/Courtesy
Ler em português
  • Initially, the app will allow the transaction to take place only between the contacts within the app;
  • Interest is negotiated by the borrower directly with the investor.

PicPay announces peer-to-peer lending (P2P), a loan from one user to another, among the portfolio of financial services offered in Brazil. With the high capacity to connect borrowers and investors among its 48 million customers and generate a wide network effect, the super-app wannabe becomes the largest platform to offer the modality in Brazil.

READ ALSO: Open banking’s debut in Brazil will create products and services that we now can’t even imagine, says Guiabolso’s CEO

Anderson Chamon, co-founder and vice president of Products and Technology at PicPay, had already said in an interview with LABS in February that PicPay would launch its first credit product. ““To continue to grow steadily and in an orderly manner, we are going to bet on the development of our ecosystem, both in the financial sector and in the other fronts in which we operate,” said Chamon to LABS.

According to PicPay, in Brazil, it is usual for credit operations to take place between family and friends. The app promises legal certainty, predictability, ease conversation, and a friendly billing process for these transactions.

“Often people stop lending or prefer to borrow money from the bank than having to charge or be charged by a friend. This part stays with PicPay and is done carefully and focused on the user experience,” says Eduardo Chedid, Vice President of Financial Services at PicPay.

READ ALSO: Brazilian ride-hailing app 99 expects to place 99Pay among the top 3 digital wallets in 2021

To reduce the risks of those who lend, initially the app will allow the transaction to occur only between the contact list within PicPay.

As with messaging apps, anyone in need of money can search for an investor (the one who can lend) on their friends’ list and start trading in the super-app environment via direct message, strengthening the network effect within PicPay.

In this dynamic, people exchange with each other, generating mutual benefit, reducing costs, and contributing to the growth of the platform.

READ ALSO: The rise of super-apps wannabes in Latin America: Rappi, Magalu and more

The interest is negotiated by the borrower directly with the investor, who according to PicPay, can have a more attractive yield than in many applications, such as fixed income, with returns up to 10 times higher than the Brazil’s interest rate benchmark. According to PicPay, with its large scale capacity, P2P lending on PicPay contributes to the democratization of access to credit while offering a more attractive investment option.

As soon as both parties agree on the terms, rates, and terms, PicPay formalizes the contract on the same day, calculates the value of the installments, and is in charge of reminding the policyholder to pay them. According to the regulation of the loan between people, the contract cannot exceed the amount of BRL 15,000.

Also, according to Chedid, all PicPay accounts undergo anti-fraud control, and users who have the function available have undergone a thorough and thorough credit analysis.

READ ALSO: The rise of digital wallets in Brazil

PicPay’s range of financial services

According to Chedid, the loan operation between people is enough to complement the range of financial services offered by PicPay. Recently, personal credit was launched, in which users can contract loans from other institutions directly on the platform, as well as use the money to pay, transfer and buy through the app itself.

“Also to attracting more users to PicPay, the loan reinforces the platform’s commitment to being a complete ecosystem, capable of allowing users to chat, negotiate contracts, pay, and consume, all in one place,” summarizes Chedid.

Get the best insights about Latin America market in your inbox