Zopa

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For other uses, see Zopa (disambiguation).

Zopa is a UK-based company providing an online money exchange, allowing people who have money to lend to provide it directly to people wanting to borrow it without the need to go through banks, a process sometimes referred to as peer-to-peer lending.

The name, Zopa, stands for Zone of Possible Agreement, a negotiating term identifying the bounds within which agreement can be reached between two parties. The idea for the service was identified following extensive socio-economic research which itself identified a group of individuals, coined Freeformers.^[1]

Freeformers were identified as displaying different attitudes towards many aspects of life, including their money, and Zopa has developed a credit referencing process that goes beyond credit bureau information in order to establish consumers' attitudes towards money, as well as their credit-worthiness. This extends their ability to offer credit to this freeformer group, who may have irregular incomes or short-term cash-flow requirements, but who may not be offered credit through traditional methods of credit referencing.

The service matches people that want to offer to lend money with people that need to borrow money. Matching is done on a many-to-one basis, such that no one lender is exposed to any single borrower. Bad debt risk is taken by the lender, and priced into the rate offered to borrowers, although debt recovery processes are available.

Variously likened to eBay and Betfair in the UK press, Zopa is an addition to the emerging group of peer-to-peer services enabled by the internet. Prosper is a similar service based in the U.S.

Launched in 2005, Zopa is led by a management team that comprises many of those that founded Egg in the UK.

The company is based in London and backed by Benchmark Capital and Wellington Partners.

The Social Futures Observatory recently published a study titled Internet Based Social Lending, which seeks to understand the antecedents of Social Lending, drawing parallels with Friendly Societies, and using Zopa as a major source of case study material.

Both borrowers and lenders are charged a 0.5% fee by Zopa on the funds for each transaction although founder members are exempt from this charge.