Despite the obvious benefits of digital microcredits, such as easier and faster accessibility, there are also some risks. Tim Unwin, Emeritus Professor of Geography at Royal Holloway, University of London, draws attention to the problem of paying off the interest after taking out these loans. Indeed, there is no guarantee that people, particularly the most vulnerable, will be able to pay back a microcredit. And there are even more challenges for those who take out bigger loans to pay off old ones, producing a vicious circle.
Another point is that the pricing and conditions may appear vague. And this is what young people are concerned by the most. Yuliya Tikhonova, a Youth IGF activist from Russia, says that the lack of awareness among the young who wish to take out digital loans is a big issue. They can be easily forced into debt if microcredits are not paid back within a fixed period of time. Astou Diouf from Senegal agrees that digital microcredits may be a good solution for vulnerable people from developing countries, but their capacity to repay such loans is often questionable, she says. If interest rates are high and repayment periods are short, people are not far from falling into a debt trap.