Wednesday, January 18, 2012

Kiva’s Secret Project To Let You Give Peer-To-Peer Loans

That’s what you thought Kiva did already? Not quite. But the new Kiva Zip lets you lend directly to a real person, with a higher chance it won’t get paid back. It’s a vast experiment in online trust and it could change the face of microfinance.

Microlending website Kiva’s original proposition was simple: Make an interest-free loan to someone who no bank will touch. The site, which launched in 2005, became wildly popular, as people gleefully gave a few dollars to struggling businesspeople in the developing world, and then saw that business grow and had their money repaid.

But many lenders assumed--not surprisingly, given Kiva’s marketing and web design--that the smiling face on the other end of the PayPal transaction got the exact cash they lent out. A minor kerfuffle ensued in 2009 when a blogger broadcast the fine print of Kiva’s website, revealing the nuance that a donation actually goes to take on the risk of a loan already made to that person by a microfinance institution. In other words, the person you chose to fund already had his loan. You just make it possible, retroactively. Read More