How monopoly in the financial loan industry affects you

How A Monopoly in The Financial Loan Industry Can Hurt You

Monopolies happens in many ways — striking a deal with government, using unfair practices to shut down competitors or even through consolidating market shares.

While some monopolies are necessary to lower costs for consumers, most of them are not. Once a company gains majority market share, they can often use that power to fix prices or negotiate for unfair deals with smaller vendors.

Learning from The Grab-Uber Merger

The merger was big news for the private car hire market in Asia, but this is not Uber’s first merger with their competitor. It happened in China too. One year after Uber sold their business to Didi, both drivers and passengers are unhappy.

Passengers now find it more expensive and difficult to hail a cab because incentives for drivers have been cut, which resulted in lesser cabs on the road.

And just a few months after the merger here in Singapore, consumers are feeling the same pinch.

“Now, it’s been more than two weeks and I haven’t received other promotions. It used to be weekly promos without fail,” said Ms Joseph, who has reached the highest member status of Platinum.

Although Grab also said that they have been gradually shifting to the GrabRewards system which allows passengers to earn points to redeem one-off promo code.

But it takes so long to even redeem the cheapest $5 promo, that it no longer makes sense for a lot of riders to take Grab as regularly as before.

This then directly impacted the drivers too. Due to the increase in fleet numbers for Grab and lesser incentives for passengers, drivers found themselves waiting more to pick up their next passenger.

Just within this short time period, both riders and drivers are seeing huge decrease in value from Grab, and we can only hope this doesn’t get any worse.

Why Moneylenders Are Important to Prevent the Same from Happening to the Financial Loan Industry

Before licensed moneylender was set up, people who aren’t eligible to borrow from the banks nor have the luxury of borrowing from friends or relatives often have to rely on loan sharks or unlicensed moneylenders for financial loan.

This caused a lot of problem for the Singapore society since loan sharks are doing all sorts of brazen acts in an effort to collect back the debts including setting homes on fire, locking up flats and using paints all around the debtor’s flat.

However, the entry of licensed moneylenders managed to change some of that. With Singapore law governing and placing restriction on this industry, consumers are getting much better protection, and they do not have to worry about the same brazen acts from loan sharks.

Hence, the complete elimination of the moneylenders means illegal moneylenders will have complete monopoly over this segment of financial loan, which may lead to many more loan sharking activities, causing inconvenience and trouble for Singaporeans.

Are there any other monopolies that you can think of in today’s market?