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The author concludes that he made a very modest profit, which only counts as a net loss if a one-time fee to Paypal is counted. Is there a way to put money int

by nmrm 12y ago

The author concludes that he made a very modest profit, which only counts as a net loss if a one-time fee to Paypal is counted. Is there a way to put money into a Zidisha account without paying processing fees? What's the cheapest way to put money into a Zidisha account? On the lender's end, I think about microfinance more as a "renewable donation" than as an "investment". So, it would be nice if 100% of the donation went to the operation of the charitable organization or the charitable act itself. edit: less ambiguous question.

jkurnia 12y ago
We don't currently offer a way to put small amounts into a Zidisha account without paying credit card / PayPal fees. That said, most of our lenders recycle their funds over multiple loans, rather than cashing out immediately when they are repaid. When the 3.5% transaction fee is spread out over many loans, the cost per loan becomes less significant.
- chrisduesing 12y ago
  Have you looked in to Balanced Payments? They enable ACH transactions at 1% + $.30 capped at $5.
  - joshstrange 12y ago
    I've used Balanced Payments before but they didn't have the $5 cap. I can confirm they now offer it but do you know when that started? My googling hasn't turned up any blog posts, currently going through all of their posts.
    - chrisduesing 12y ago
      I can't say when they started, but we've been using it for our marketplace for a little over 6 months and it has been capped the whole time.
      - joshstrange 12y ago
        Thanks! I looked through their blog archives but didn't see anything.
  - jkurnia 12y ago
    We haven't investigated Balanced Payments specifically - thanks for the tip! We did experiment with offering ACH payments via a different service (Check Gateway) a couple years ago. We discontinued that, because the automated address and other verification checks required for online ACH authorizations blocked many legitimate payers, such that it cost more in declined payment fees and hassle for our lenders than it saved in transaction cost. Also, almost half of our lenders are outside the US.
- mfheretic 12y ago
  Correct, I failed to mention this in my original post. My fee was $35 (3.5% of $1000), and my total bids have been $1818 over the period, so this equates to about 2% overall. Unsure if I have to pay this 3.5% to get the funds out again. Have you thought of speaking to PayPal to see if they would waive this fee as they did with Kiva? They seem fairly sympathetic to microfinance, and this is an innovate model. However, they may perceive you as a competitor to Kiva, particularly as they now have Kiva Zip, and I imagine Kiva themselves would prefer to retain exclusivity in this waiver of trasnaction fees. No harm in asking. Post their response here!
  - jkurnia 12y ago
    We do not charge any fee for withdrawals - we cover that cost ourselves so that lenders may withdraw their full balance at any time. We did request free payment processing for Zidisha, and have also asked Kiva to request the same deal for Zidisha. Two years ago we even had an online petition for PayPal to waive fees for Zidisha loans - https://www.change.org/en-AU/petitions/paypal-stop-charging-fees-on-zidisha-org-microloans https://www.change.org/en-AU/petitions/paypal-stop-charging-.... Thus far, our applications for free or heavily discounted payment processing have been turned down, and we continue to seek more cost-effective options.
- pbreit 12y ago
  Funding a lending account should migrate over time to bank transfers. PayPal offers such a method with just a $0.50 fee.
mfheretic 12y ago
I would only need to raise my average APR by about 0.2% to cover the PayPal fee. Interestingly Kiva gets around this: "Kiva is the first organization that PayPal has supported by providing free payment processing. This support saves Kiva up to one million dollars each year, which helps us to keep our operational expenses low and send 100% of your loan contributions to the field." The CEO of Kiva is formerly from PayPal. This is a serious advantage to Kiva, and disadvantage to Zidisha. I have no idea if there is an alternative way of uploading funds to Zidisha without incurring these fees. Regarding my profit motive, I don't see these platforms as an effective means to profit. I seek to break-even. By seeking to break-even this permits side-by-side comparisen. It creates a level playing field to compare, and from this, one can modify the break-even criteria to measure the impact. For example, on MyC4, if I see a loan is fully-funded at 12.2%, but the interest ceiling is 12%, I have a simple Excel tool that tells me how much I need to bid at 5%, or 0%, in order to displace enough of the highest-cost bidders in order to faciliate the loan. So, I might do a modest loan of only $25, at a very low or zero interest rate, but as a result of this a loan for $500 which may not have otherwise been disbursed is able to be disbursed. I consider this a good use of my funds. Also, by constantly displacing the highest bidders, at the margin this may frustrate them by constantly having their bids removed at the last minute, and persuade them to lower the rates they charge - who knows if this is effective or not, but this is one strategy I use. But, overall I seek to break-even on all these platforms. This is not entirely altruistic. I also have a one-year fixed-term deposit at a regulated microfinance bank that I know very well, which yields 8% APR and suffers no forex risk. My funds are also used for lending to microfinance clients, only I don't know precisely which ones. My logic is that this generates a relatively risk-free return (the credit risk is with the bank itself, not the individual clients), and means that if I break-even, or take a few hits on my P2P lending, then in the long-run this all cancels out, and I might cover inflation hopefully. Such fixed-term deposits might be considered an alternative mechanism for microfinance lending, but it is relatively undiscovered in the mainstream retail sector, also invovles transaction costs, and requires more paperwork to set up. And of course, it doesn't harness the feeling (imaginary or otherwise) of P2P lending.
- notahacker 12y ago
  Do you mind sharing the name of the microfinance bank you deposit at?

by nmrm 12y ago

jkurnia 12y ago

We don't currently offer a way to put small amounts into a Zidisha account without paying credit card / PayPal fees. That said, most of our lenders recycle their funds over multiple loans, rather than cashing out immediately when they are repaid. When the 3.5% transaction fee is spread out over many loans, the cost per loan becomes less significant.

chrisduesing 12y ago
Have you looked in to Balanced Payments? They enable ACH transactions at 1% + $.30 capped at $5.
- joshstrange 12y ago
  I've used Balanced Payments before but they didn't have the $5 cap. I can confirm they now offer it but do you know when that started? My googling hasn't turned up any blog posts, currently going through all of their posts.
  - chrisduesing 12y ago
    I can't say when they started, but we've been using it for our marketplace for a little over 6 months and it has been capped the whole time.
    - joshstrange 12y ago
      Thanks! I looked through their blog archives but didn't see anything.
- jkurnia 12y ago
  We haven't investigated Balanced Payments specifically - thanks for the tip! We did experiment with offering ACH payments via a different service (Check Gateway) a couple years ago. We discontinued that, because the automated address and other verification checks required for online ACH authorizations blocked many legitimate payers, such that it cost more in declined payment fees and hassle for our lenders than it saved in transaction cost. Also, almost half of our lenders are outside the US.
mfheretic 12y ago
Correct, I failed to mention this in my original post. My fee was $35 (3.5% of $1000), and my total bids have been $1818 over the period, so this equates to about 2% overall. Unsure if I have to pay this 3.5% to get the funds out again. Have you thought of speaking to PayPal to see if they would waive this fee as they did with Kiva? They seem fairly sympathetic to microfinance, and this is an innovate model. However, they may perceive you as a competitor to Kiva, particularly as they now have Kiva Zip, and I imagine Kiva themselves would prefer to retain exclusivity in this waiver of trasnaction fees. No harm in asking. Post their response here!
- jkurnia 12y ago
  We do not charge any fee for withdrawals - we cover that cost ourselves so that lenders may withdraw their full balance at any time. We did request free payment processing for Zidisha, and have also asked Kiva to request the same deal for Zidisha. Two years ago we even had an online petition for PayPal to waive fees for Zidisha loans - https://www.change.org/en-AU/petitions/paypal-stop-charging-fees-on-zidisha-org-microloans https://www.change.org/en-AU/petitions/paypal-stop-charging-.... Thus far, our applications for free or heavily discounted payment processing have been turned down, and we continue to seek more cost-effective options.
pbreit 12y ago
Funding a lending account should migrate over time to bank transfers. PayPal offers such a method with just a $0.50 fee.

mfheretic 12y ago

I would only need to raise my average APR by about 0.2% to cover the PayPal fee. Interestingly Kiva gets around this: "Kiva is the first organization that PayPal has supported by providing free payment processing. This support saves Kiva up to one million dollars each year, which helps us to keep our operational expenses low and send 100% of your loan contributions to the field." The CEO of Kiva is formerly from PayPal. This is a serious advantage to Kiva, and disadvantage to Zidisha. I have no idea if there is an alternative way of uploading funds to Zidisha without incurring these fees. Regarding my profit motive, I don't see these platforms as an effective means to profit. I seek to break-even. By seeking to break-even this permits side-by-side comparisen. It creates a level playing field to compare, and from this, one can modify the break-even criteria to measure the impact. For example, on MyC4, if I see a loan is fully-funded at 12.2%, but the interest ceiling is 12%, I have a simple Excel tool that tells me how much I need to bid at 5%, or 0%, in order to displace enough of the highest-cost bidders in order to faciliate the loan. So, I might do a modest loan of only $25, at a very low or zero interest rate, but as a result of this a loan for $500 which may not have otherwise been disbursed is able to be disbursed. I consider this a good use of my funds. Also, by constantly displacing the highest bidders, at the margin this may frustrate them by constantly having their bids removed at the last minute, and persuade them to lower the rates they charge - who knows if this is effective or not, but this is one strategy I use. But, overall I seek to break-even on all these platforms. This is not entirely altruistic. I also have a one-year fixed-term deposit at a regulated microfinance bank that I know very well, which yields 8% APR and suffers no forex risk. My funds are also used for lending to microfinance clients, only I don't know precisely which ones. My logic is that this generates a relatively risk-free return (the credit risk is with the bank itself, not the individual clients), and means that if I break-even, or take a few hits on my P2P lending, then in the long-run this all cancels out, and I might cover inflation hopefully. Such fixed-term deposits might be considered an alternative mechanism for microfinance lending, but it is relatively undiscovered in the mainstream retail sector, also invovles transaction costs, and requires more paperwork to set up. And of course, it doesn't harness the feeling (imaginary or otherwise) of P2P lending.

notahacker 12y ago
Do you mind sharing the name of the microfinance bank you deposit at?