How Will eBay Affect Peer to Peer Lending?
Microcapital reports (via Auctionbytes) that eBay has moved into the peer-to-peer lending space with the purchase of MicroPlace.? This is significant because eBay is far from the first to enter this space – which is currently dominated by Kiva, Zopa, and Prosper.
How will a big company like eBay succeed in the nascent world of P2P lending?? Will this affect the way Kiva or Propser works?? More on the acquisition, from Microcapital:
MicroPlace will soon launch an eBay style online marketplace where individuals will be able to make microfinance investments, most likely in the form of notes offered by microbanks.? The transaction will be hosted by eBay working through an intermediary like the US Calvert Foundation in order for such investments to clear regulatory hurdles. It will be in the same vein as current sites such as prosper.com (for-profit), where individuals list and bid on loans within the US market, and Kiva.org (non-profit) where individuals can lend to specific micro-businesses in the developing world through links with microfinance institution (MFI) partners.How ?great a thing for the global community? it remains to be seen. The success of this recent venture by eBay will depend on giving its customers what they want. But in a ?global community? who are the customers? If the customers are those people in advanced economies, shopping online for ?feel good? investment opportunities, then MicroPlace is likely to be as successful as Kiva.org and Prosper.com. However, for the microbanks and the micro-borrowers involved there is the additional risk of foreign currency exchange. If this risk is not properly managed then the burden will fall heavily upon those who we all seek to help.? Can a giant like eBay responsibly off load this clear and present risk onto microbanks and micro-borrowers?
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