{"id":605994,"date":"2025-08-13T09:58:31","date_gmt":"2025-08-13T07:58:31","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=605994"},"modified":"2025-08-13T13:35:58","modified_gmt":"2025-08-13T11:35:58","slug":"pep-smartphone-rental-warning","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/cellular\/605994-pep-smartphone-rental-warning.html","title":{"rendered":"Pep smartphone rental warning"},"content":{"rendered":"\n<p>An analysis by <a href=\"https:\/\/www.slantresearch.com\/2025\/06\/12\/the-rise-of-rent-a-phone\/\" data-type=\"link\" data-id=\"https:\/\/www.slantresearch.com\/2025\/06\/12\/the-rise-of-rent-a-phone\/\" target=\"_blank\" rel=\"noreferrer noopener\">Slant Research<\/a> shows that Pep&#8217;s smartphone rental product \u2014 FoneYam \u2014 may not be as affordable as it claims to be.<\/p>\n\n\n\n<p>Since launching in 2024, the rent-a-phone service has been a huge success for the Pepkor Group. Over the six months ending March 2025, it recorded revenue growth of more than 100%.<\/p>\n\n\n\n<p>The book value of FoneYam customers has also surged from R258 million in H1 2024 to R1.7 billion in the same period for the 2025 financial year.  <\/p>\n\n\n\n<p>The retailer describes the offering as a &#8220;secure and affordable opportunity&#8221; to rent a smartphone. However, Slant&#8217;s calculations showed FoneYam was around 25% more expensive than a regular credit agreement plus insurance.<\/p>\n\n\n\n<p>In addition to the price difference, customers must return the device after the rental period or pay fair market value to keep it. If they took out a loan to pay for the device instead, they would own it.<\/p>\n\n\n\n<p>The basic pricing structure of FoneYam is as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Upfront payment <\/strong>\u2014 30% of the device value <\/li>\n\n\n\n<li><strong>After 7 days<\/strong> \u2014 6% of the device value<\/li>\n\n\n\n<li><strong>Each month for 12 months<\/strong> \u2014 12 equally split payments totalling the remaining device value multiplied by 233.5%<\/li>\n<\/ul>\n\n\n\n<p>The product includes insurance with cover for loss or theft of the device, as well as death, disability, and loss of income cover. <\/p>\n\n\n\n<p>In cases of loss or theft, the device is replaced. If death, disability, or loss of income claims are approved, the contract becomes null and void. <\/p>\n\n\n\n<p>Slant Research used FoneYam&#8217;s own calculator to determine how much more a customer would pay for a rented smartphone than when buying it in cash.<\/p>\n\n\n\n<p>It determined that users would pay 185% of the device&#8217;s cash value (or 85% more) over the 12-month rental period. That is substantially higher than the gross margin on a credit agreement.<\/p>\n\n\n\n<p>In its 2025 interim financial results, Pepkor&#8217;s chief financial officer described the product&#8217;s margin as &#8220;slightly higher&#8221; than normal credit products. Slant Research said this was a &#8220;bit of euphemism.&#8221;<\/p>\n\n\n\n<p>The table below provides a breakdown of the costs of devices with a R1,000, R2,000, or R4,000 cash value on FoneYam<\/p>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"table-responsive\"><table class=\"table\" class=\"has-fixed-layout\"><thead><tr><th>Cash value<\/th><th>R1,000<\/th><th>R2,000<\/th><th>R4,000<\/th><\/tr><\/thead><tbody><tr><td>30% upfront payment<\/td><td>R300<\/td><td>R600<\/td><td>R1,200<\/td><\/tr><tr><td>6% after seven days<\/td><td>R60<\/td><td>R120<\/td><td>R240<\/td><\/tr><tr><td>Total monthly payments<\/td><td>R1,494.36<\/td><td>R2,988.84<\/td><td>R5,977.56<\/td><\/tr><tr><td><strong>Total cost over rental agreement <\/strong><\/td><td>R1,854.36<\/td><td>R3,708.84<\/td><td>R7,417.56<\/td><\/tr><tr><td><strong>Difference <\/strong><\/td><td colspan=\"3\">+85.44%<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Max interest rate loan and insurance more affordable<\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"547\" src=\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2025\/08\/FoneYam-banner-1200x547.jpg\" alt=\"\" class=\"wp-image-606004\" srcset=\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2025\/08\/FoneYam-banner-1200x547.jpg 1200w, https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2025\/08\/FoneYam-banner-600x274.jpg 600w, https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2025\/08\/FoneYam-banner-768x350.jpg 768w, https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2025\/08\/FoneYam-banner.jpg 1405w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<p>To better illustrate its point, Slant Research compared the cost of a 12-month loan to buy a smartphone \u2014 the Samsung Galaxy A05 \u2014 while paying for insurance on the device. <\/p>\n\n\n\n<p>The Galaxy A05 was selected as the value of the roughly 2,300 FoneYam payments Slant Research analysed indicated that this was one of the most popular devices customers were renting.<\/p>\n\n\n\n<p>The loan was calculated at 26% annual interest \u2014 the maximum rate for this type of lending. Using Techsured&#8217;s typical premiums, the insurance premium was set at 35% of the device&#8217;s value.<\/p>\n\n\n\n<p>It is important to note that this insurance includes cover for damages in addition to loss or theft, whereas FoneYam&#8217;s premium does not include damage cover.<\/p>\n\n\n\n<p>However, it does not have the added protection of death, disability, and loss of income cover. <\/p>\n\n\n\n<p>Nonetheless, Slant Research said that the underlying cost of damage cover was likely to be the most significant component of this kind of insurance policy.<\/p>\n\n\n\n<p>The total cost of the loan with insurance was roughly 61% more than the cash price of the device. The customer also gets to keep the device without paying any additional fees. <\/p>\n\n\n\n<p>&#8220;From the customer&#8217;s perspective, FoneYam is not an especially affordable smartphone financing option,&#8221; Slant Research said.<\/p>\n\n\n\n<p>However, the researchers acknowledged that they may be underestimating the costs involved in offering the product.<\/p>\n\n\n\n<p>One possible factor is the increased risk inherent in letting lower-income customers pay off a device over an extended period.<\/p>\n\n\n\n<p>That being said, the product includes an extraordinary mitigation against this \u2014 software built into the device to render it inoperable when a customer fails to make payments. <\/p>\n\n\n\n<p>As a rental service, National Credit Act customer protection protocols, such as interest rate caps, do not apply to FoneYam. <\/p>\n\n\n\n<p>However, unlike a traditional rental agreement for a property or a vehicle, the customer pays back the full value of the asset during the rental period, and more.<\/p>\n\n\n\n<p>FoneYam is also not legally obliged to report its agreements and customer payment profiles to the South African Credit and Risk Reporting Association or other credit bureaus for credit checks. <\/p>\n\n\n\n<p>However, it cautions customers that it may report the manner in which they conduct their rental payments to credit bureaus.<\/p>\n\n\n\n<p>MyBroadband asked Pepkor for comment on Slant Research&#8217;s findings, but it did not provide feedback by the time of publication.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>An analysis by Slant Research shows that Pep&#8217;s smartphone rental product \u2014 FoneYam \u2014 may not be as affordable as it claims to be.<\/p>\n","protected":false},"author":341042,"featured_media":475267,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[14],"tags":[22263,94993,4280,4278,70830,100937,51437,99554,100936],"class_list":["post-605994","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cellular","tag-ackermans","tag-foneyam","tag-jet","tag-pep","tag-pepkor","tag-rent-a-phone","tag-rentals","tag-slant-research","tag-smartphone-rentals"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/605994"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341042"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=605994"}],"version-history":[{"count":14,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/605994\/revisions"}],"predecessor-version":[{"id":606582,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/605994\/revisions\/606582"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/475267"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=605994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=605994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=605994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}