— This is the script of CNBC's news report for China's CCTV on August 13, Tuesday.
Welcome to CNBC Business Daily
Yet another website is joining the crowd funding game. Toronto based social networking site, Wattpad, has just launched a platform called "fan funding".
Wattpad is a social networking site for writers and readers - so the funding is solely for Authors to raise cash for their next project.
But it's yet another sign of how crowd funding, or peer-to-peer funding where cash is raised directly from individuals, is taking off.
So how exactly does it work?
Renaud Laplanche, Founder & CEO of Lending Club, an E-commerce site that offers P2P funding explains.
[Sound on tape by Renaud Laplanche, Founder & CEO, Lending Club: We have dollars on one side, we are looking to taking out a new loan or refinancing existing high interest rate credit card debt at the lower rate and on the other side we have investors who are looking to earn a higher yield than the 1 or 2% that they are earning on their savings account. And we really do the matchmaking, we underwrite and service the loans on behalf of investors.]
The Lending Club says nearly 2.3 billion dollars in loans have been raised since it started in 2007. But is the firm at risk of a high default rate, especially if their customers already have a high debt burden?
Here's Laplanche again.
[Sound on tape by Renaud Laplanche, Founder & CEO, Lending Club: The annual fee of term loan, the average annual default or charges is about 3-4% and our customers are not in any type of financial. They are actually looking to lower the cost of their credit so mainly more than half of the American consumers carry some credit card debt. credit card debt is the high interest rate generally between 16-18%. So the opportunity to refinance their debt at 13-14% and switch to a viable interest rate on the credit card to a fixed rate with Lending Club is really attractive for prime consumers.]
Li Sixuan, from CNBC's Asia headquarters.