Revolut, the FinTech startup, launched a new credit product for its U.K. users in which they can apply and get approval for a credit line within minutes.
According to a report, Revolut is working with Lending Works to provide the credit lines to its customers. Lending Works is a peer-to-peer online lending firm that hooks up individual lenders with individual borrowers. In order for users to apply for a credit line, all they have to do is open the Revolut app on their mobile device and apply for credit. Users are able to choose how much money they want to borrow and how many months they want to take to pay it back. After providing monthly income and residency status, the app shoots back a quote, and the user either accepts or declines it.
According to the report, Revolut said borrowers pay £52 to borrow £1,000 over a year, which amounts to a 9.9 percent annual percentage rate, which is often a lower rate than what borrowers can get with a credit card or a loan from a bank. If users borrower more or over a longer period of time, the cost of borrowing goes up. Revolut is offering credit lines between £500 and £5,000 with a repayment period of anywhere from 12 to 60 months. There are also no prepayment penalties.
In November, Business Insider cited Revolut Founder and Chief Executive Officer Nikolay Storonsky as saying the company is not issuing any new cards and is putting interested people on a waiting list as it changes licenses. Two unnamed sources told Business Insider the halting of issuing new cards is due to an argument between the company and partner Paysafe, which issues cards and processes payments. Paysafe reportedly told Revolut to stop issuing cards after it found many of the issued cards were not in the confines of Europe.
“Because we work with Paysafe, they are not allowed to open accounts outside of Europe, so we had to inform people that, for a short time, they will not be able to open accounts outside of Europe, and then, when we get our own license, we can open these accounts again,” said Storonsky in the interview.