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Are Kiva and MyC4 p2p lending services? 

In this post Netbanker questions, if MyC4 and Kiva are offering p2p lending. He argues they are “not really peer-to-peer”.

Let’s have a look, if these microfinance models can fit under the definition of peer to peer lending. One aspect of p2p lending is, that the lender can select individual borrowers, which he wants to lend money to. Kiva and MyC4 offer this choice. A p2p lending platform usually allows search parameters to narrow the search for matching borrowers (e.g. by credit grade). Both have this function allowing to search by country, gender, industry and more.

A possible argument against classifying MyC4 and Kiva as p2p lending companies is the fact that they use local microfinance institutions as intermediaries acting between lender and borrower and charging fees. That is true, but several other p2p lending services (e.g. Prosper, Lending Club and Smava) use banks as intermediaries (for legal reasons).

So where exactly is the divide seperating MyC4 and Kiva from other p2p lending services. They differ especially on the factor that:

  1. Borrowers can not sign up themselves (so one side is really offline); borrowers are selected and screened by the MFIs
  2. Business model
  3. Lenders receive no interest at Kiva
  4. Lenders and borrowers do not reside in the same country.

I still think that MyC4 and Kiva can be defined as p2p lending services. With Microplace the case is different, because no individual borrowers can be identified; therefore Microplace could be excluded form p2p lending (Microplace states that it is not a p2p lending site).

(Photo credit: Stig Nygaard)

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3 Responses to “Are Kiva and MyC4 p2p lending services?”

  1. Steve Rabago Says:

    ZimpleMoney is a recent entrant in the p-2-p space. ZimpleMoney lets people use their naturally occurring networks to borrow from or lend to. Additionally, organizations interested in making microfinance loans may use the platform to facilitate just that. Unique to the ZimpleMoney platform are its social network features – now you can get engaged with the projects you are financing in a much more meaningful way. the double benefit is contrbutors expereince their contribution and can engage more frequently with the program recipients. I encourage your readers to take a look at ZimpleMoney.com. Zimpley, Steve Rabago, ZEO, ZimpleMoney

  2. Jean-Christophe Says:

    2 thumbs up ! I fully agree that Kiva and MyC4 are p2p lending services.

    IMHO, so are these 2 new french-based microfinance P2P websites: Veecus http://www.veecus.com/search.php and Babyloan http://www.babyloan.org/

  3. Jerry Ostradicky Says:

    I think that you can definitely classify Kiva as a P2P lending platform. When you go Kiva, you can narrow down your search criteria and choose a specific person to lend to. On top of that, Kiva does not charge any fees. There is a voluntary donation that they ask you to give in order to cover their operating costs, but it is not required. As far as the MFI that you go through, they are just an intermediary to link the borrower with the lender. Without going through the MFIs, many of the borrowers would not have any way to access these funds.
    Another good P2P lending platform is Wokai.org, which recently launched. It is a P2P lending platform focused in China.

    Jerry