PayJoy aims to provide its services to consumers who have a smartphone but dont have a bank account. According to a 2018 world bank report, there are 1.7 billion adults globally who fall in this category.

In a statement, U.S. fintech startup PayJoy, which enables consumers with no bank account, thus no formal credit history, to purchase smartphones on installments and get cash loans, stated it has developed smartphone technology to facilitate access to credit in emerging markets. In a funding round round, it has raised $20 million from venture capital firm Greylock Partners.

Union Square Ventures, EchoVC and Core Innovation Capital also participated in the funding round, said PayJoy.

The San Francisco-based startup disclosed, it will use the additional funds to expand, and secure more partners and develop new technologies.

Given the rise of digital financial services, it believes making smartphones more affordable will significantly increase financial inclusion in our society.

“We’re building technology to help people carve a path into the financial system,” said Mark Heynen, PayJoy’s co-founder and chief business officer.

1.7 billion adults across the globe do not have a bank account; however two thirds have a mobile phone which could provide them access to financial services, states a 2018 World Bank report.

According to Josh McFarland, a partner at Greylock, he believes PayJoy’s technology and distribution network could help emerging markets unlock some of their economic growth.

“Credit is a major piece of the infrastructure needed to help the global middle class better their quality of life,” said McFarland.

PayJoy, which employs around 90 people globally, operates in more than 10 countries including Mexico, India, Indonesia, Nigeria, Kenya and Guatemala.

In the majority of markets, PayJoy has partnered with with retailers and credit providers to provide its services to consumers; partners include Telefonica, Vodacom and Orange SA.

PayJoy’s technology does not make underwriting reliant on traditional credit scores, but seeks to increase consumers’ willingness to pay by taking advantage of their desire to access the phone, which in turn can help keep default rates in check, said Heynen.

He declined to disclose default rates.

“Customers like it because it makes the phone pay-as-you-go,” said Heynen. “In some cases, if they decide they can’t pay, they can send in the phone and have their contract canceled.”