Technology giant Google has introduced a raft of new measures to limit the emergence of unregulated digital lenders who take advantage of borrowers by offering high interest rates on loans.
According to Google, the emergence of digital lenders is on the rise because of how easy it is to establish lending platforms. All you need to become a digital lender is to download the Android Package APK, customize it and just like that you are a lender.
The tech giant however wants to tame the emergence of new entrants, who are relishing this low barrier of entry into the banking sector, to ensure they are regulated in some way or form.
To this effect Google, has ordered multinational digital lenders whose apps appear on Google Playstore, to reveal their maximum Annual Percentage Rate (APR), which covers interest rate fees and other costs for a year. Google has similarly taken down digital lending apps from its Playstore platform whose loans mature in less than two months.
“We do not allow apps that promote personal loans which require repayment in full in 60 days or less from the date the loan is issued-we refer to these as “short-term personal loans. This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-party lenders,” Google’s updated terms and policies read in part.
According to a news report by the Business Daily, Google’s decision to take the fight to the unregulated digital lenders has been welcomed by players in the industry despite Google’s motivation not being clearly defined.
“You have to reflect on this in the context of digital ecosystem where Google has now emerged to play a very interesting role where they are technically applying market action that is of a regulatory nature, which puts financial services regulators also in an interesting position. But of course without understanding what their motivation is, we cannot tag them as a regulator,” Eric Muriuki General Manager New Business Ventures at Commercial Bank of Africa (CBA) said according to the Business Daily.