eBay MicroPlace Launches
MicroPlace, eBay’s answer to Kiva, launched today. Through MicroPlace, investors can make microloans to the working poor in developing nations around the world.
Rather than choosing borrowers directly (as lenders on Kiva do), MicroPlace investors buy securities (complete with a prospectus) for a microfinance institution (MFI) which makes the loan to the borrowers. MicroPlace lets you see the profiles of specific borrowers, but ultimately the heart-wrenching story is just the sales pitch to a cold, hard investment vehicle. If you really wanted to offer Jose (at right) the $280 that he needs, the best you can do is offer it to his MFI and hope that he gets a portion of it.
On the plus side, MicroPlace securities pay 1-3% interest, depending on the MFI. Although this is less that you’d earn on a CD or money market fund, it’s more than you’ll make on Kiva, where lenders don’t earn interest at all.
My feelings on this site are split. On one hand, it’s hard to get excited about microfinance if you don’t know who is getting your money (there’s a reason Sally Struthers always sent you a picture of the poor child you were sponsoring). On the other hand, interest is never a bad thing. It’s nice to feel like you’re doing well (or at least doing something) by doing good.
Kevin at RateLadder has set up an account and invested some money, and seems to have had a good experience.
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[...] ads claiming you can earn up to 6% on your money. The microlending outfit backed by eBay launched 18 months ago as the first online microfinance platform that provided a return to investors, and has gradually [...]