Minck Hermans, Karma CEO

Karma allows employees monthly salary advances of £300 with zero interest -  in stark contrast to the 1200% punitive rates charged by some lenders.

The ground-breaking smartphone app has conducted consumer tests in Scotland with the backing of Fortunis Capital, who specialise in investments that transform society for the better.

Employers signing up to Karma can advance staff £300 on their salary to purchase goods and services at retailers – in person and online -  including Tesco, Asda, Morrisons, Waitrose and Amazon. Employees pay no interest or fees and, unlike current lending schemes, may improve their credit rating.

The Scottish Government has welcomed Karma, with Ivan McKee, innovations minister, describing the company as a “fintech seeking to solve a major societal challenge”. 

Karma’s mission is to rid the UK of the unsecured individual debt problem which currently stands at £340 billion.

Minck Hermans, Karma CEO, said: “We have built not just a solution, but are starting a global movement, to disrupt the short-term consumer loan market and eradicate the pain this causes.

“Employers are rewarded with increased productivity and employee engagement, plus the recognition that they are doing the right thing; employees are empowered with more control of their finances; and our retail partners are rewarded with more business. Everyone wins.

“This will end the necessity of people relying on crippling short-term loans for essentials, or to meet unexpected costs, in order to bridge that gap before payday.

“Our completed tests in Scotland have proved to be hugely positive, as has the initial reaction from Scottish agencies and the tech sector.”

Justin MacRae, chief operations officer at Fortunis Capital, said the initial ambition is to deploy up to £500million a year.

Fortunis are a Home Office endorsing body.

Mr MacRae added: “Fortunis is built on fundamental core values: we believe in innovation over exploitation. Our investors share the same ethos, the same mission.

“Karma joins the industry-accredited fintech cluster in Edinburgh, where it has found a depth of talent, an open and collaborative environment with the University of Edinburgh’s Bayes Centre and positive reaction from government groups.

“With Scotland open to attract technological investment in the nation’s social capital, this is the perfect environment for ethical fintech companies such as Karma to flourish.” 

Ivan McKee, minister for trade, investment and innovation, commented: “Scotland has a worldwide reputation for attracting innovative businesses such as Karma and providing them with the opportunity to grow and prosper. It’s a pleasure to welcome Karma here, particularly as a fintech seeking to solve a major societal challenge and make lives better for people in Scotland, and across the globe.”