BON Credit: The Gig Workers’ Credit Destination

When referring to the developments in the FinTech space in India in the recent times, the one underlying issue that still remains to be addressed in its promising roadmap is the dire need to inculcate banking (& financial) services till the last mile of the population. With the World Bank’s Global Findex Report data stating that the number of adults above the age of 15 not having a bank account in India is 191 million – meaning that 1 in every 5 Indians doesn’t have a bank account. So, in essence, lack of financial inclusion exists – though, with FinTech, real possibilities exist. The historically limiting factor of the extent (reach) of financial services was initially attempted to be resolved via the offering of direct transfer benefits (DTBs) incentive – although, even with this their overall income wasn’t convincing enough to persuade them to subscribe to regular banking services.

However, the changing times have now made available speedy training programs even for the unskilled workers – making them, to some extent, a recruitable earning resource for the platform companies, such as Uber, Ola, Swiggy, etc. The global ride-hailing aggregator, Uber, for instance, provided skill development and driver training to the unskilled for bettering their livelihoods. One such initiative was taken by Uber in 2016 when it partnered with the NSDC (National Skill Development Council) and Maruti to train 1 million unskilled workers as drivers. The arrival of new work avenues led to the framing and implementation of discriminating work policies and dismal remuneration practices, repercussions of which weren’t in favour of the compelled informal workforce.

The problem that such platform market companies have created for the workforce is related to their remunerative policies. This leaves the drivers helplessly facing a severe cash crunch – more so in the era of digital payments and especially when the percentage share of profit going to the drivers has now gotten substantially reduced. The gig working drivers (contractors) of Uber have expressed their dismay multiple times by organising strikes against depleting earnings over-time, rendering them helpless in being able to afford to repay their car loans. Such labor market unrests are not healthy even for the economy as a whole – as they render the population caught in jeopardy, the upliftment of which is among the primary development goals pursued by the government of India.

While the drivers working as contractors for the mobile app-based cab aggregator were initially lured by the offers posing strong incentives (as the low-rate of aggregator commission was at 10% then), all of it soon changed as the demand and supply dynamics shifted aggregator commission to 30%, rendering them helplessly buried under a debt burden. The core of the problem lies in the fact that the drivers receive their money a day later when the payments are made via mobile wallets. The resultant cash crunch is brutal for the drivers’ sustenance – the cashless payment systems used by cab service subscribers leave little to no money in the hands of cab drivers.  Let alone managing their families with that money, the drivers can’t even manage their cars sufficiently (e.g., expensing for petrol fuel, vehicular maintenance, food, toll charges, repairs, etc.).

As an outcome of getting entangled in this cumbersome situation, the non-salaried gig economy workers (contractors) experience exclusion from the regular financial services spectrum (i.e., they don’t qualify as borrowers – per the standard definition of a “qualified borrower” laid-out by traditional banks – since these contractors don’t get payslips that the lenders can underwrite). This fissure in the system needs concrete solutions to strengthen the livelihood of this worker segment – that is what Pune (India) based BON Credit is committed to doing with their app-credit card. BON assists gig economy worker groups (viz. drivers with ride-hailing startups, temporary contractors, freelancers, and other gig-economy workers) be able to cater to their recurring short-term working capital needs. BON offers lending solutions to its target segment via partnerships inked with NBFCs (Non-Banking Finance Corporations) that fuels its MasterCard-powered BON card.

BON offers a weekly credit limit to the subscribers of a BON card – the parameters assessed by BON include preceding 10 earnings cycles, cash percentage vis-à-vis digital earnings, the duration for which the subscriber has stayed on the platform, the city in which the subscriber operates, and the frequency and speed of exhausting the credit limit. BON allows the subscribers to swipe the BON card at merchant outlets for expenses pertaining to their work. The standard cycle of repayment is of 30 days – upon maintaining a decent repayment record, the credit limit rises substantially. BON is in the process of also covering white-collar freelancers in its innovative credit offer. The unique feature of BON’s offering is that it’s a marketplace for non-salaried borrowers where lenders – via auctions undertaken by BON – compete through bids to win transaction funding opportunities. Formalising the informal means of credit available to cab drivers so as to save them from the uneconomical clutches of traditional (expensive and inefficient) money lenders, BON is a credit lifeline for over 40,000 fleet drivers and delivery executives.

Work, Life, Balance – with BON, credit is good!

For BON Card Application: +91- 96731 96731 or hello@bon.pe