Kiva Bill Payments/Bank Partnership/Liquidity

[Guest]

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[Skimmis]

I don't see getting Kiva to perform some sort of mid-loan account transfer to facilitate an account "sale" as either likely or desirable.  Many lenders already understand that they have a safety net built in because they get repayment credits each month and can withdraw them if needed.  

On the unhappy topic of currency risk, several people have requested a change to that "feature" such that the risk would be accounted to the final payment rather then on each payment, to make currency losses/gains more equitable.  This would shift the entire currency risk to the mid-loan purchaser and further depress any agreed upon price for the transaction.  

Would the seller pay Kiva a fee for such a thing?  What discount would the seller have to agree to?  I suspect that in many cases a buyer would offer cents on the dollar.  If you add a transaction fee, the seller would probably get very little.  Perhaps less than their next payment would be anyway.  

Significant programming and accounting changes would be required by Kiva to process such a transaction.  I just don't see that Kiva stands to benefit much at all by taking on such a project.

Wouldnt need any help from Kiva, i would just buy an account , use the username and password, and transfer avilable money each month by using Giftcards to my main account.

[iampaul]

Wouldnt need any help from Kiva, i would just buy an account , use the username and password, and transfer avilable money each month by using Giftcards to my main account.

Wow, a collection of accounts acquired by an "account broker" in that fashion could get pretty weird. They might have some very unexpected baggage even if the loan portfolio itself seems pretty sound. What if the account being offered was one that was started by a scammer using a stolen credit card to fund it? Oh, and when you buy that GC on your newly acquired account's cash balance, don't forget about that 30% "voluntary donation" that Kiva is going to try to sneak in there on your money laundering.

Paul

[Henry]

Significant programming and accounting changes would be required by Kiva to process such a transaction.  I just don't see that Kiva stands to benefit much at all by taking on such a project.

in this imaginary world....

programming changes are minimal depending on how 'automatic' kiva would wish it to be.

my vision for KSC in this instance....   would be manual and require similar to the following

KSC1 has 75 loans each with an 'identifier field' attached to that loan and transactions which labels them as KSC1
KSC2 has 55 loans each with an 'identifier field' attached to that loan and transactions which labels them as KSC2
KSC3 has 30 loans each with an 'identifier field' attached to that loan and transactions which labels them as KSC3

a querry on the identifier field for KSC2 and KSC3 would pull up all the loans and transactions related to those two accounts - then a change from KSC2, KSC3 to KSC1's ID would then allow them all to fall into KSC1's account history and balances.

probably a couple more things out there that might have to be done - but it's really not too much more complicate than that.  Now kiva's reasons (legal/historical/etc) behind not allowing such a thing to happen are just their wishes - as for the process to let it happen - not so involved.

since I'm not inside kiva's database - I could be way off base - but I feel certain I'm close.  

[saruon]

I think a secondary market for Kiva securities is not the best way to increase liquidity because secondary market loans would compete with regular loans and this would result in less money for Kiva not more.  Corporate partnership is simpler to implement and would not disturb regular lending or introduce the complications of loan trading.  

The easiest implementation is offering the ability to pledge future repayments to third parties.  For example, let's say I have a credit card with a bank - let's call it SunnyBank.  Let's say I have a $700 in loans and a $500 credit card bill.  I would like to have the option of pledging the next $500 in loan repayments to SunnyBank.  My credit card bill is paid and in exchange for receiving their money a little later SunnyBank gets to list Kiva as a corporate partner and to promote that they are giving money to help the world's working poor.  

Most people will still choose to relend their repayments except in case of emergency but just having that safety net there makes a big difference.

- David

[cpbailey]

If banks cannot manage home loan risks, which is one home with an appraisal, then how would they be able to evaluate individual portfolios with international, microloans with currency risk at times, various amounts in various countries AND mfis?  Just saying, that banks are barely glancing at easier to evaluate loans to businesses that are local. 

Besides, in December there is an annual tradition of running out of loans.  Take a break November-January if you need some cash.

Colette

[iampaul]

The easiest implementation is offering the ability to pledge future repayments to third parties.  For example, let's say I have a credit card with a bank - let's call it SunnyBank.  Let's say I have a $700 in loans and a $500 credit card bill.  I would like to have the option of pledging the next $500 in loan repayments to SunnyBank.  My credit card bill is paid and in exchange for receiving their money a little later SunnyBank gets to list Kiva as a corporate partner and to promote that they are giving money to help the world's working poor.  

The whole reason these MFIs are around and loaning to the entrepreneurs shown on Kiva is because those entrepreneurs have traditionally been turned down for loans by banks as too high of a risk for the corporate tastes. You appear to be suggesting that they will turn around and accept that same risk anyway just because you have decided to go ahead and loan what they would not. I still don't follow your reasoning.

Paul

[saruon]

The whole reason these MFIs are around and loaning to the entrepreneurs shown on Kiva is because those entrepreneurs have traditionally been turned down for loans by banks as too high of a risk for the corporate tastes. You appear to be suggesting that they will turn around and accept that same risk anyway just because you have decided to go ahead and loan what they would not. I still don't follow your reasoning.

Paul

I am not suggesting that banks take on these loans.  I am merely saying that we should have the ability to pledge our repayments to other parties that are willing to accept them as a form of payment today.  The simplest implementation would be to add other options to repayment settings.

[iampaul]

I am not suggesting that banks take on these loans.  I am merely saying that we should have the ability to pledge our repayments to other parties that are willing to accept them as a form of payment today.  The simplest implementation would be to add other options to repayment settings.

Whether the repayment comes directly from your Kiva account through some modified repayment settings or directly from you after you cash out those repayment credits doesn't matter except maybe in the very slightest. Too many things can delay (i.e. pause in Net Billing for a FP,) reduce (i.e. Currency Loss) or even end that repayment (i.e. default on the part of the entrepreneur or FP.) Look them up here on KF. I don't know how to say it any clearer. Your suggestion amounts to promising the same assets to two different groups. I don't see it happening. If you do find someone who will accept your promised repayments from Kiva in lieu of more immediate payment from you, please let me know who that is. I want check if any of my retirement funds are invested in them and decide whether I should reevaluate that investment.

Paul

[saruon]

Whether the repayment comes directly from your Kiva account through some modified repayment settings or directly from you after you cash out those repayment credits doesn't matter except maybe in the very slightest. Too many things can delay (i.e. pause in Net Billing for a FP,) reduce (i.e. Currency Loss) or even end that repayment (i.e. default on the part of the entrepreneur or FP.) Look them up here on KF. I don't know how to say it any clearer. Your suggestion amounts to promising the same assets to two different groups. I don't see it happening. If you do find someone who will accept your promised repayments from Kiva in lieu of more immediate payment from you, please let me know who that is. I want check if any of my retirement funds are invested in them and decide whether I should reevaluate that investment.

Paul

Paul,

I hope you're not holding any Visa stock as they just gave Kiva a million bucks.

My point is that the positive press and access to new customers far outweighs the cost of delayed repayments to a potential partner.  Sure, a small fraction of the repayments may not materialize due to the reasons that you mentioned but in that case the account holder would still be liable for the difference.  In the end my plan amounts to trying to forge partnerships with financial institutions in order to increase the liquidity of loan portfolios.  I believe this will drive more money to Kiva than a 1-time donation of $1 million from Visa and it will not cost a lot to the bank that steps up and makes this partnership.  This will be a rarely used feature because it is basically taking money from the working poor to pay your bills.  However, just having the feature makes a huge difference - just the knowledge that you can have access to your money in case of emergency is hugely helpful when making the decision to loan to the world's working poor.

Dave