“It is where eBay meets credit unions by way of easyJet, the peer-to-peer movement and Betfair.” (From Peer Pressure, The Guardian, March 11, 2005)

Meet Zopa, the company profiled in Peer-to-Peer Banking in Business 2.0 magazine. Service is available to UK residents over 18. Their CEO, Richard Duvall, is “now eyeing the US market. But analysts say federal and state regulations could present obstacles.”

How it works:

According to their website, people who are willing to invest become Zopa lenders and can choose to lend to riskier borrowers at higher rates or to more qualified borrowers at lower rates. Borrowers then browse available rates, and if there’s an agreement a loan is made. ZOPA, by the way, stands for “Zone of Possible Agreement and is the overlap between one person’s bottom line (the lowest they’re prepared to get for something) and another person’s top line (the most they’re prepared to give for something).”

Zopa divides lenders’ offers up and distributes them around at least fifty potential borrowers. Zopa then manages the payment collection process and charges borrowers a 1% exchange fee.

How Zopa shapes their message:

Zopa is for creditworthy people who earn money in new ways, in ways that banks don’t always recognise. People who are self employed, people who have peaks and troughs to their income, people who would be invisible to a bank’s credit rating system but are seen and validated by Zopa’s. (From www.zopa.com)

The idea of “peer-to-peer banking” was directly behind the birth of the credit union movement. Today for-profit Zopa has discovered that same message still appeals to the masses – over 10,000 people have joined Zopa since their website launched in March 2005.