Frequently asked questions
Microfinance first started in Bangladesh at the start of the 1970s. It is an effective means of fighting poverty and offering basic financial services to poor populations who are excluded from traditional banking systems. Typical services offered include loans, savings accounts, money-transfers, and insurance. In just a few decades, microfinance has become a tremendous economic tool for creating jobs and wealth, as well as a social and political ferment enabling the most poverty stricken to create activities which generate income. In 2006, over 80 million people in the world had access to microfinance services, assisted by over 10,000 Microfinance Institutions (cooperatives, NGOs, microfinance banks) or commercial banks. There are still an estimated 500 million people with projects pending funding.
The principle of microcredit is to offer small loans to entrepreneurs and artisans who do not have access to traditional bank loans. With these micro-loans, they are able to execute micro-projects, thus providing employment and assisting local economic development. Microcredit is developing mainly in emerging countries. Microcredit is one of the services offered by microfinance institutions. To learn more, please see the section on microfinance.
Online peer-to-peer (P2P) microcredit is a new development in microfinance. With P2P microfinance, internet users can select microentrepreneurs’ projects from all over the world and finance them directly by lending money via an Internet platform. Internet users can then track the progress of their projects on line right up until total repayment has been made. On line microcredit platforms provide new sources of financing to microfinance institutions, enabling them to support new projects, and also allow new types of lenders (Internet users) to take concrete action in the struggle against poverty. Pi Slice is the new online microcredit platform aimed at individuals, companies and foundations.
When you create an account with Pi Slice, you become a member of the Pi Slice community. This is an essential step before you can lend to micro-entrepreneurs and participate in events organised by the community. Once you have set up an account, you can follow your loans online, create groups of lenders who share the same interests and associate your friends with your projects to encourage them to become lenders themselves and alert them to the issues you feel strongly about.
Go to the Home page of the site and click on “Log In” at the top right of the page. Then, in the “Not a member yet?” section, fill in the required fields and click on “Create a new account”. The information you will be asked to provide is a valid e-mail address, a user name or screen name, which will be visible on the site and a password. A confirmation e-mail will be sent to you confirming your registration with a link to click on to activate your account. Before you can make your first loan you are also required to complete your profile and provide the following information: name, first name, address and date of birth.
Choosing a project
In the main menu at the top of the page, click on “Projects”. This will take you to the Projects page, where all the projects available on Pi Slice, pending funding or repayment, are displayed. They are classified by country, activity, status (pending funding or repayment) and beneficiary. You can use the filters on the left hand side of the page to select a specific project or click on one of the countries on the map in the centre of the page to go directly to all the projects available in that country. Next select your project and click on the “Add to my selection” button below the project description. You can select several projects by clicking on them one at a time. If you want to find out more about a project or a borrower, click on the borrower’s photo to go directly to their project page. There you will find information about the related country and its economic context, the borrower and the terms of the loan. On this page, you can also select the amount you wish to lend (minimum $20), then click on the “Lend” button to add the loan to your basket.
Confirming your loan commitment
To view the loans you have chosen, click on “My selection” in the top right hand corner of any page on the site. From here you can review your chosen projects and change the amounts you wish to lend. Confirm your loans by clicking on “Continue”. You can then either use the funds available in your Pi Slice account to finance these projects or pay with a bank card via our payment partner MangoPay. NB: Funding is accepted in multiples of $20. You can therefore invest $20, $40, $60, $80, etc., with a minimum requirement of $20.
By clicking on "PAY", you confirm a loan commitment that will become firm and final after 7 calendar days corresponding to a period of right of withdrawal.
In case of withdrawal, the amount lent will be fully repaid to the lender within 30 calendar days following the date of withdrawal.
Your loan contract
After the period of right of withdrawal, your loan commitment becomes firm and final. The loan contract is made available to you at the time of disbursement of the funds in the "My Account" section.
Financing your projects with MangoPay
Pi Slice has chosen MangoPay for its secure online payment system for financing micro-entrepreneurs’ projects.
To finalize your loan commitment, click on "PAY NOW” on the payment page – you will then be automatically transferred to a MangoPay page.
After payment, you will receive an email from Pi Slice confirming your loan commitment that will become firm and final after 7 calendar days corresponding to a period of right of withdrawal.
In case of withdrawal, the amount lent will be fully repaid to the lender within 30 calendar days following the date of withdrawal.
For more information about MangoPay, click on this link.
If a member so wishes, he/she may suggest to another member or any other person, on condition that this person becomes a member first, that he/she participate, in part or in full, in the funding of a project of his/her choice on the site. This is called sponsoring.
In this way, the sponsor may make the sum of his choice available to the sponsoree via his/her Pi Slice account or send him/her a “Pi Slice Pass" so that he/she can invest in one or several projects in his/her name.
With a Pi Slice Pass a sponsor can send a sponsoree, by means of an alphanumeric code composed of 10 characters, multiples of $20 totalling a maximum of 1000.
There are 2 types of Pi Slice Passes available
- Gift Pass: Give a Gift Pass of $20 or more, valid for 1 month. The amount will be repaid to the Pi Slice Pass recipient once the project duration is completed.
- Discovery Pass: Give a Discovery Pass of $20 or more, valid for 1 month. The money will be invested by the recipient of the Pi Slice Pass on your behalf. Once the project duration is completed, your account will be refunded.
The sponsoree then has 1 months from the date of issue to activate his/her Pi Slice Pass by entering the alphanumeric code on the “My Selection” page in order to finance one or several projects. After this date, the code will be automatically cancelled.
In the main menu at the top of the page, click on the “My Account” section to view the history of your loan portfolio and the balance remaining in your Pi Slice account. On this page, you can also view your personal profile, investment profile and keep in contact with the Pi Slice community.
In the context of the new regulation, Pi Slice has implemented thresholds of bank movements beyond which an in-depth customer knowledge procedure (KYC) is implemented.
Those thresholds are:
- - The sum of incoming flows over the last 12 months superior or equal to 2 500 €
- - The sum of outgoing flows over the last 12 months superior or equal to 1 000 €
Once one of these thresholds is reached, the lender will need to send a number of documents via My Account section > Personal Information.
The movements on the account will be blocked until this information is transmitted and validated.
To avoid a possible blockage, you may at any time decide to anticipate this procedure by providing the following documents.
Documents to transmit if you are a private individual:
- - Photocopy front / back of a valid ID card or passport*
- - Proof of address less than three months old (eg: water/electricity/gas/telephone bill, tax certificate, householder insurance, confirmation of real estate ownership)*.
For people accommodated freely, provide also a handwritten statement from the host and an identity proof of the host.
Documents to transmit if you are a business or an organization:
- - Copy of articles of association*
- - Registration proof of less than 3 months old*
- - Proof of address of the individual duly empowered to act on behalf of the legal entity (Photocopy front / back of a valid ID card or passport*
- - If appropriate, shareholder declaration to fill in*. Download the declaration here.
*File formats supported: PDF, JPEG, PNG.
Pi Slice has the right to request additional documents and information as part of this customer knowledge procedure.
You will be informed by mail when your documents are validated. You will then be allowed to make new investments and withdrawals from your Pi Slice account. You can track the status of the documents sent (under validation, validated, refused) in My Account section > Personal information.
When the loans you have made reach the end of their term, Pi Slice credits your Pi Slice account with the amount repaid. You can lend these funds again, or request to withdraw part or all of your balance.
To do so, go in “My Account” section > Home, enter your the IBAN of your bank account and choose the amount you wish to withdraw (which must be less or equal to the balance available on your account) then validate.
NB: Funds used for financing a project may not be withdrawn before the loan maturity date of the project.
- Go to the "Community"page
- Click on “Create a group” at the top right of the page.
- Choose a name for your group, its description, category (family, company) and a catchphrase to encourage users to join it. Also, upload a picture that illustrates your group.
- Once you have created the group, you can change it at any time and, most of all, invite friends.
If, while surfing on the site, you find a group that interests you, click on the group’s picture or name. Once you are on the its homepage, click on the “Join this group” button. If the group is a public one, you will be accepted as a member immediately; if it is private, you will have to wait for the administrator to accept you. You can also look for a group using well-defined criteria on the page Community>Groups.
- Share your group and communicate about your activity on social networks (Facebook, Twitter, LinkedIn etc.) by clicking on the desired social network’s icon. A sharing bar is displayed at the top of each group’s homepage.
- By being a group’s facilitator you can promote its activity and publicise microcredit and microfinance, as well as help reduce poverty in the world.
- Extend your group by inviting a friend to join it, by clicking on the tab “Invite a friend”.
- Be your group’s facilitator by posting comments on it about the group’s activity, in the “Actions” inset situated under the list of projects financed by the group.
MangoPay is the Payment Service Provider (PSP) edited by Leetchi Corp SA, subsidiary of Leetchi SA. MangoPay has an e-money license valid in Europe.
To manage the financial flows and the electronic money generated by the use of the platform, Pi Slice has decided to partner with MangoPay.
The new crowdfunding law in 2014 requires the segregation of funds that are channeling through crowdfunding platforms to ensure a greater safety for users.
The funds that you invest on Pi Slice transit on segregated bank accounts held by MangoPay in a bank under the guarantee of bank deposits set up in Europe.
All the Microfinance Institutions (MFIs) we have pre-selected are rigorously examined to ensure they are financially sound and that the social character of their missions is appropriate. An investment and risk board is responsible for carrying out due diligence checks and an operational audit before validating or not a maximum sum of outstanding loans for the MFI. For more information, see “Selection of MFIs.
The various micro-entrepreneurs and their projects are selected by our local investment partners, the MFIs. These MFIs are all highly-reputed and firmly established with a wealth of experience in the field of microcredit. They have the expertise and resources required to assess entrepreneurs’ potential projects and the adequate infrastructures to support, training and accompany micro-entrepreneurs. It is the MFIs, in agreement with Pi Slice, who select the projects to be published and offered on the site.
Unlike humanitarian donations, solidarity loans guarantee lenders that 100% of the sum loaned will be paid to the selected micro-entrepreneur. However, since the procedure for financing a project and transferring funds can be quite lengthy, it is possible in some cases that the MFI will advance financing for the project from its own funds, so that the micro-entrepreneur doesn’t have to wait. When the MFI receives the funds sent by the Pi Slice lenders, it is then in a position to free up the funds it had advanced and reinvest them in a new project. This refinancing technique is common practice in online microcredit. This procedure is in fact similar to making a purchase on a credit card – when you purchase goods, the credit card company advances the money to the retailer on the understanding that it will recuperate the amount from your account at the end of the month if you use the deferred debit system. Here, the MFI advances the loan to the borrower and the advance is then reimbursed to the MFI via the Pi Slice lenders.
The micro-entrepreneur repays his loan according to a precise schedule established with the MFI. When all the repayments have been completed, the MFI transfers the funds to Pi Slice who then makes the amount in question available to the lenders. The transfer of the funds from the MFI to Pi Slice is made in one single payment to limit the number of money transfers and to guarantee the MFI partner a minimum level of stability with regard to its outstanding liabilities.
In order to fight against poverty and help local economies to develop, Pi Slice offers to finance entrepreneurs’ projects with interest free loans. This gesture of solidarity is very different from a donation because it is based on a concept of economic sustainability rather than emergency humanitarian aid. Furthermore, 100% of the sums lent go to helping the micro-entrepreneurs and not to financing Pi Slice’s operating expenses. These sums are then paid back to the lender once the loan has been repaid. However, at the moment, for economic reasons and legislation we cannot organise the payment of interest on loans. We are looking into this subject but we believe that bringing support by financing projects with interest free loans is a unique opportunity today.
Yes, micro-entrepreneurs pay interest on the sums borrowed from MFIs. One of the principal objectives of micro-financing is to create a model of sustainable development. In this way, the assistance provided to populations traditionally excluded from financial services can take place in a context where all the participants in the chain benefit in some way and can cover their costs and envisage developing their activity on a long term basis. The MFIs therefore bear the significant operating and refinancing costs which have to be covered, resulting in interest rates which are often equivalent to 3% per month rather than per year. This may seem very high when compared to the rates charged by banks in developed countries, but this comparison is misleading because the economic context is very different, even if, as in all sectors, there are cases of abuse which must be tackled. To find out more, go to the chapter devoted to this subject: Microcredit interest rates. There is also a special report about it.
The amount of a microfinance loan can vary depending on the region. In India, for example, an average loan would be around $120, whereas in Eastern Europe it would be more like $1,800 dollars (Source: MixMarket 2009).
In order to limit this risk, meticulous procedures are followed to select and monitor the MFI partners which relies on the expertise of MicroWorld and Planet Finance. Detailed financial and operational audits are conducted on all MFI partners and the financial soundness of our partners is constantly monitored in order to anticipate risk. However, it is important to note that our MFI partners are located in countries where the economic and political environment is often fragile or where the risks may be significant. To read more on the subject, see section "Risk Management".