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Ethical Fintech Hopes to Eradicate Payday Loan Debt Cycle

Ross Kelly



Employees pay no interest or fees and can improve their credit rating through new app.

A fintech startup aimed at eradicating payday loans is being trialled in Scotland with the support of an ethical investment firm.

Karma’s smartphone app allows employees monthly salary advances with zero interest applied, which is in stark contrast to the high interest rates charged by many payday lenders.

Employers signed up to the app can advance staff up to £300 of their salary to purchase goods and services at retailers including Tesco, Asda, Morrisons, Waitrose and Amazon.

Karma CEO, Minck Hermans, said the company hopes to disrupt the payday loan market and combat the damaging effects they have upon consumers.

“We have built not just a solution, but are starting a global movement to disrupt the short-term consumer loan market and eradicate the pain this causes,” he said.

“Employers are rewarded with increased productivity and employee engagement, plus the recognition that they are doing the right thing; employees are empowered with more control of their finances, and our retail partners are rewarded with more business. Everyone wins,” Hermans added.

Consumer tests of the app have already been carried out in Scotland with the backing of Fortunis Capital. Karma has also been supported but he FCA sandbox programme, which tests new products in a regulatory framework.

Justin MacRae, chief operations officer at Fortunis, said Karma will be well-suited to Edinburgh’s fintech cluster, which will enable the company to thrive.

“Karma joins the industry-accredited fintech cluster in Edinburgh, where it has found a depth of talent, an open and collaborative environment with the University of Edinburgh’s Bayes Centre, and positive reaction from government groups,” he said.

“With Scotland open to attract technological investment in the nation’s social capital, this is the perfect environment for ethical fintech companies such as Karma to flourish,” MacRae insisted.


Ivan McKee, Scottish Government Minister for Trade, Investment and Innovation, welcomed Karma’s arrival to the nation’s fintech cluster.

“Scotland has a worldwide reputation for attracting innovative businesses such as Karma and providing them with the opportunity to grow and prosper. It’s a pleasure to welcome Karma here, particularly as a fintech seeking to solve a major societal challenge and make lives better for people in Scotland, and across the globe,” he said.

Ross Kelly

Staff Writer

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