Global payments company PayPal has made a strategic investment in Tala, a fintech startup that lends to consumers in emerging markets.
Tala, a popular mobile lending company, announced Monday (Oct. 22) the investment from PayPal. The lender said the undisclosed investment from PayPal will help the company to develop its product and broaden its reach to underserved regions in emerging markets across the world.
The California based firm is currently operating in emerging markets and lends to individuals in Kenya, Tanzania, the Philippines, and Mexico through its smartphone app. Since it began operations, the company has disbursed over $500 million in loans to millions of customers. This is not a small amount especially given that the company faces stiff competition from other popular and emerging mobile lenders.
Tala, formerly Mkopo Rahisi, is one of the top lending apps in Kenya. Others include Branch, Saida, and Zidisha. The reception of these lending apps has been great and that partly explains the expansion plans.
The company continues to report notable growth since entering various markets across the world. This growth can be attributed to easy access to unsecured loans and their policy of offering lower interest rates to customers who have reached higher credit limits. Tala customers can access a maximum $50,000 in credit.
At present, Tala is not the only lending app that is raising money for expansion as Branch recently raised $70 million in a Series B funding to expand to other countries, including India.
The mobile lender is among a growing number of new entrants that are taking advantage of digital technologies to offer financial services to people that had previously been excluded by the traditional banking sector because they are considered unprofitable to serve. In many cases, this category is also considered is too risky or too since they lack security.
In a statement, Mark Britto, senior vice president and general manager of global credit at PayPal added that Tala shares their vision of revolutionalizing financial services especially for those considered underserving by the traditional financial system.
In an interview, Tala CEO and founder, Shivani Siroya, said that PayPal and Tala shared a commitment to serving this consumer segment.
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