Proposal for a new model

[Guest]

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[mig]

Hi,

I would like to implement on my site a new way to take people to lend through Kiva. This model might probably be of interest for some other webmasters / online sellers.

I am the author of a very popular Firefox addon (~20 millions installs to date). Although the product is free, it is possible to extend the capabilities by purchasing a commercial license (materialized as a code). Licenses can be purchased on my site exclusively via a PayPal payment.

Instead of only proposing to purchase the product to obtain the license, i would like to give an alternative: make a loan on Kiva. So basically users accessing the product registering page would be proposed to either pay ~30$ or make a loan through a specific lender group at kiva, for a minimum amount (maybe 100$). In my case, i can commit to distribute at least 10% of the licenses through loans. The ratio purchases/loans can easily be controlled by tuning the minimum loan amount.

As far as i understand, this cannot be done for now as Kiva system misses a few features for a specific lender group  (which in my opinion shouldn't be too hard to implement):

• a callback from Kiva to the merchant server to confirm the payment (similar to PayPal IPN system)
• redirecting the user after the payment so the product can be delivered there

Has anything like this ever been implemented or discussed ? Can it be considered ?

Greetings to all,
/mig

[Henry]

this would appear to be a technical question that should be addressed by KIVA.  Please direct this question to Contactus@kiva.org

[mig]

Thanks. I just did so.

/mig

[TheTatiana]

I think it's a great idea!  Which add-on is yours?  If it's adblock I love you!  =)

[mig]

No, it's Video DownloadHelper. Hope you'll still love me a bit 

I tried to take the developer of Adblock Plus into this Kiva thing but without success.

/mig

[wthepoo]

No, it's Video DownloadHelper. Hope you'll still love me a bit 

mig,

don't know about TheTatiana, but I do (well... in a way...) - great tool.

I hope you will be successful with your initiative - please keep us informed -, and I am prepared to make use of your offer (unless the minimum loan amount will be too high... $100 sounds about fine).

Best wishes,
Wolfgang.

[Henry]

Why doesn't IE need something like this?  (curious)

[mig]

Henry: it's not that IE doesn't need something like this, it's just that the IE programmer interface (API) is not open enough to permit it. Many users moved from IE to Firefox just because there was a Firefox addon they wanted to use that didn't exist on IE. Hopefully, you'll take the step one day 

wthepoo: Thanks. 100$ seems reasonable to start with but it might evolve. Any online seller who would implement this model wouldn't want to "loose sales" beyond what he expected. Just a question: if there is a product you are ready to purchase for 30€, how much are you ready to lend instead ?

[wthepoo]

Just a question: if there is a product you are ready to purchase for 30€, how much are you ready to lend instead ?

Me, personally... rather a lot, probably, because I am stingy but don't really have liquidity issues, now, and I would lend on Kiva, anyway. Thus, instead of paying €30, I would readily consider lending as much as $250 but had to think about it with $500 (I might do it anyway) - always given that

(1) I lend it in my name and with funds returning to my Kiva account (no Gift Certificates or something like that),
(2) I get to pick the loans without restrictions as to repayment term, region, and MFI,
(3) I am free to donate towards Kiva's administration costs... or not.

$250 sounds a lot at first and might deter users (which you would not have to mind, mig, because you basically profit from the sales not the loans), but it is in fact very reasonable IMHO. Because the lender is likely to be repaid the money - well, or technically "be able to withdraw" it from Kiva after repayments from her/his loans, and does something good with it, too.

Her/his costs are:
(1) Risk of default - at the moment (factoring in MIFEX) less than 3.5%, with portfolio diversifaction and choice of 5-star-MFIs the lender is IMHO on the very safe side with assuming no more than 5% of losses on defaults;
(2) Loss of interest - if the lender gets to choose the loans, (s)he can determine the loan term her-/himself. Unless (s)he is very cheap and very lucky in getting hold of short-term-loans, I guess it is a good guess that the average loan term (for borrowers) would be around 10 months. Taking into account the delayed repayments according to PA 2, and not taking into account the opportunity to prematurely withdraw monthly repayments, this would mean loss of interest for around 1 year. Let's assume, the lender is able to get safe 5% p.a. in interest for a 1 year obligation / overnight money etc.
(3) European lenders will lose out on currency conversion fees and bear a currency risk/chance €-$. Paypal invariably charges a conversion fee of 3.5% when withdrawing Paypal-$ to a €-bank-account; for investing, you will either have to pay these 3.5% for conversion € => $ or you can go with the CC-conversion-rate (in Germany usually 0 - 1.75%). Let's assume it's Paypal all the way: 7%, but disregard the currency risk/chance.

Thus, overall, $250 in Kiva loans would cost the lender at most $42.50 or about €33.50 at today's exchange rate of €1 = $1.2695, and these are very conservative assumptions and calculations - I consider it would turn out at no more than €25, always with the (rather big) risk of the Euro getting stronger, again.

HTH, best wishes,
Wolfgang.

[mig]

That's an excellent analysis ! I totally agree with you.

[TheTatiana]

Well, no, sorry, I don't love you after all, but I do think you're really cool! 

I think it would be great if the person (particularly if it's as high as $250) could make several smaller loans instead of one big loan.  Maybe any combination of loans adding up to $250?  Would that make it a whole lot harder to implement?  It would make it more flexible. 

[wthepoo]

Of course, TheTatiana is right.

I based my post on the assumption that I could make any number of loans to reach the sum - for three reasons: (1) diversification of risk, (2) the idea of helping more than one person/group (of course only to a smaller extent, but still), and  (3) the fun of choosing more loans.

I wouldn't feel very comfortable of lending more than $50 or maybe $100 towards one entrepreneur/group.

Thanks, TheTatiana, for pointing this out.

Best wishes,
Wolfgang.

[mig]

That makes sense indeed and it shouldn't be too hard to implement.

So the user would get the product once the total of his/her loans reaches a given amount.

Many thanks for those valuable feedbacks.

/mig

[Soriak]

In terms of implementing it, maybe you can do it through Kiva gift certificates? You could buy a few and let people choose between buying a gift certificate from you or paying for the license.

[mig]

Thanks for the idea, but i really want something that can be fully automated and i also don't want the money flow to go through my account.

[mig]

Hi,

I didn't get any response from Kiva after 2 weeks

Does someone know an email address of someone concerned at Kiva, or a reasonable alternative to Kiva ?

Greetings,
/mig

[wthepoo]

Hi,

I didn't get any response from Kiva after 2 weeks

Does someone know an email address of someone concerned at Kiva, or a reasonable alternative to Kiva ?

Greetings,
/mig

Hi mig,

you could send a PM here on KF to Gerard (http://www.kivafriends.org/index.php?action=profile;u=2555) or to Liz (http://www.kivafriends.org/index.php?action=profile;u=558) - they manage Kiva's Customer Service - or even to Premal (http://www.kivafriends.org/index.php?action=profile;u=486), Kiva's President.

Best wishes,
Wolfgang.

[mig]

Thanks, i'm going to do so.

[rinkuhero]

Since your goal is 10%, why not do it more directly, and instead of offering a loan option, just say "10% of every sale goes towards Kiva.org loans"? That's what I do for my game's site, actually. That seems a simpler way to do it, technologically.

[mig]

Since your goal is 10%, why not do it more directly, and instead of offering a loan option, just say "10% of every sale goes towards Kiva.org loans"? That's what I do for my game's site, actually. That seems a simpler way to do it, technologically.

Well, if 10% of every sale (~3$ per sale) goes to a loan, this will make significantly less than ~300$ every 10 sales. I also want to make sure no-one can suspect me to keep money for my organization. If people make loans on their own, there is no risk there.

I've been in touch with Premal, Liz and the engineer in charge of opening the Kiva system with an API. I am rather optimistic that the model i proposed can be set up in the first months of 2009.

[wthepoo]

Well, if 10% of every sale (~3$ per sale) goes to a loan, this will make significantly less than ~300$ every 10 sales. I also want to make sure no-one can suspect me to keep money for my organization. If people make loans on their own, there is no risk there.

I've been in touch with Premal, Liz and the engineer in charge of opening the Kiva system with an API. I am rather optimistic that the model i proposed can be set up in the first months of 2009.

That's really good news, mig! And I agree with your rationale.

Best wishes,
Wolfgang.

[rinkuhero]

Well, you could always be transparent about the number of sales and provide a link to your kiva account so that they can see the loans being made, to reduce suspicions like that, but I see your point. I'm doing it the easier way, myself -- I sell shareware games online, and give 10% to Kiva, and so far nobody has been openly suspicious of it. In practice I actually give more than 10%, since it's addicting, but 10% is a good bottom line I aim for.