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Wonga expands in online payment market
Payday lender Wonga has expanded its global reach to consumers after acquiring German company BillPay.
Amid the controversy, criticism and fierce political debate about whether payday lenders should be regulated, Wonga made the announcement on Friday that it had finalised a deal and bought out the European firm.
BillPay is an online payment and financing platform, linking around 2 million users with 3,500 retailers. Wonga says the move will “create one of Europe’s leading digital finance and payment systems businesses”.
Payday lenders came under the spotlight earlier this year when the Citizens’ Advice Bureau accused them of being “out of control” and showing a “complete disregard for [their] customers”.
These claims were backed up by figures that suggested 58% of payday lenders did not make consumers aware that the loans should not be used to fill long-term financial gaps, whilst 72% of cases saw pressure being put on consumers to extend their loans.
In some cases, consumers were charged as much as 5,853% APR on their short-term loans.
This week, Sheffield MP Paul Blomfield launched a petition to increase regulations on payday lenders, saying they are “ripping off millions of people [and] trapping them in spirals of debt”.
Commenting on the BillPay deal, Wonga founder Errol Damelin said, “The combined Wonga and BillPay business will consolidate our position as a pioneer in the financial revolution, offering customers a range of bold new payment and credit solutions for the modern world.”
Meanwhile, Labour leader Ed Miliband pledged to increase taxes on payday lenders if elected in the 2015 general election, giving the proceeds to credit unions. He said, “We will force payday lenders to pay back into communities, so we can expand low-cost lenders that actually help families.”
Further reading:
Miliband pledges to force payday lenders to ‘pay back to communities’
Payday lenders face strong calls for tighter regulation
Wonga (5,853% APR), Wongate, Wronga or just plain wrong
‘Out of control’ payday lenders accused of irresponsible practices