Paying for Smartphones

Smartphones are dirt cheap. That’s for people like us. There’s still a huge chunk of Indians for whom it’s still not cheap enough to afford. Buying it on EMI’s is always an option. But increasingly, there’s a new option in town: “collateralized smartphones”, writes Nilesh Christopher.

 

Here’s how it works: vendors lend the buyer the money for the phone. At high interest rates, of course. Nothing new so far. Here’s the difference:

“Users install an undeletable app at the point of sale. The apps can then monitor repayment behavior throughout the duration of the loan.”

Say, the buyer misses an instalment. Initially, the app will show audio-visual reminders. Then it starts doing annoying things like changing your wallpaper. Or showing a reminder the next time you turn on the camera. Then the app takes more serious measures like blocking social media apps like Facebook (Imagine what blocking WhatsApp would do to the user!). Eventually, the app just shuts the phone down altogether. It’s unusable. A brick, not a phone.

 

Such methods are increasingly common in poorer countries across the world. From India to Mexico to Africa. Countries where affordability is an issue. As also is debt recovery. Google tied up with Kenya’s largest telecom operator for such a provision. Samsung does the same if you buy a phone via its Samsung Finance+ program.

 

Authorities in many countries, including India, choose to ignore this issue altogether. Why? Because they see the benefits to every individual owning a smartphone. But obviously, the lender needs some protection too. If the legal system can’t provide it, well, then in the greater interest, this is a trade-off worth making for now.

 

Unfortunately, such phones can and do get sold as second-hand phones to unsuspecting folks who end up paying twice: first to the guy who sold it to them, and then the remaining EMI’s on the phone! So be careful the next time you buy a second-hand phone…

 

So no, there are no easy answers on this topic for poorer countries. For now, the benefits of the smartphone are trumping the frauds and the coercive payment methodology.

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