Zopa

Zopa is a P2P social money lending service that allows lenders and borrowers to deal directly with one another, cutting out the banks who act as middlemen. Zopa works in the following way: the company first categorizes borrower credit scores with an A*, A, B, or C rating; then lenders make offers that vary by money amount and time period for persons with a certain credit score; and borrowers can then choose an offered rate. So by eliminating the middleman, Zopa takes on such responsibilities as distributing money between parties, completing the legal paperwork, performing borrower identity/credit checks, and employing a collections agency that chases missed payments for the lender. Zopa also mitigates risk for lenders by enforcing monthly direct debit repayment, making borrowers sign a legal contract, and allowing lenders to lend small chunks of money to individual borrowers (i.e. someone lending $1000 would have their money spread across say 50 borrowers). The company itself makes money by charging a 0.5% transaction fee for borrowers and 0.5% annual fee for lenders. Zopa has received public acclaim as well, having been awarded CNET Technology Awards 2006 Internet Innovation of the Year, the 2007 Webby Award for Best Banking/Bill-Paying Website, and the Banker 2007 Award for Best Internet Project. Other P2P lending services include Lending Club, Prosper, and Kiva.