India, once predominantly a nation of debit card users, is now embracing credit cards with unprecedented enthusiasm. In April 2023, India recorded a remarkable 25 crore credit card-based merchant payments, surpassing debit card transactions standing at 22 crore.
This seismic shift underscores the growing relevance of credit cards in the Indian market, presenting an unmissable opportunity for businesses.
Your commitment to providing value and convenience to your customers is paramount as a business. Credit card EMI unlocks doors to budget-friendly shopping, enabling customers to make purchases they might otherwise postpone or miss entirely.
In this blog, we’ll delve deep into credit card EMIs and learn how they can elevate the shopping experience for your customers while bolstering your sales and customer loyalty.
How does credit card EMI work?
Credit Card EMI is a convenient way to make big purchases and spread costs over several months. Most banks allow customers to convert transactions into EMI using their internet banking, mobile app, or phone call. It is vital to understand that bank or credit card issuer deems customers eligible to have the EMI option available.
This is because EMIs are ultimately viewed as loans that are repaid monthly. Therefore, the issuing bank will check creditworthiness before they hand out this loan.
Another crucial thing to note is that EMI comes with an interest. The interest rate can vary from bank to bank and may depend on customers’ credit score.
Customers’ EMI includes a portion of the principal amount (the cost of the item) and the interest. If they choose a shorter tenure for repayment, customers will likely pay lower interest.
Benefits of credit card EMI for budget-friendly shoppers
If your customer is a budget-conscious shopper, the credit card EMI can be a very useful tool. It offers several advantages to help customers manage their finances wisely and enjoy what they desire.
Here are some of the benefits of shopping with a credit card EMI:
Credit card EMI allows customers to split their purchases into smaller, manageable chunks. This means customers won’t have to shell out a large sum of money all at once. They can budget their monthly expenses more effectively.
No strain on savings
EMI plans help ensure that your customer can keep their savings intact. Instead of depleting their savings for a big-ticket item, they can spread the cost over several months, leaving the emergency fund untouched.
Some credit card companies offer zero or low-interest EMI options, especially on specific products or during promotional periods. This can save customers a significant amount of money in interest charges.
Most online stores and banks let customers choose the EMI tenure that suits their budget. Whether it’s 3, 6, 9, or 12 months, they can pick the best duration for their financial situation.
Improve credit score
Regularly paying the EMI on time can positively impact your customer’s credit score. It shows that they’re a responsible borrower, which can benefit them in future credit applications.
Convenience and perks
Applying for EMI has become extremely convenient nowadays. Customers can do it themselves online or call their credit card provider.
There is no need to visit banks or fill out lengthy paperwork. Some credit cards even offer extra rewards or cashback on EMI transactions.
The business advantage of offering credit card EMI
If you’re a business owner, you might have considered offering credit card EMI options to your customers. It’s not just a benefit for shoppers; it can also be a smart move for your business.
Here are some of the ways your business can grow by offering this facility:
Attract more customers
EMI plans help make your products or services more affordable, enticing more customers to buy. Shoppers are more likely to make a purchase when they know they can pay over time, even for higher-priced items.
A recent study conducted by Home Credit India found that more than 50% of people in India prefer using an EMI card or any credit card for shopping instead of paying right away.
Boost sales revenue
Offering EMI can increase sales volume as customers are more inclined to buy, resulting in higher revenue for your business. People who might have hesitated to purchase due to budget constraints are more likely to convert when EMI is available.
This is proven by the fact that 70% of iPhone purchases in India are made through EMIs. Thanks to this affordable pricing, such premium gadgets are no longer restricted to the rich class only.
With it, businesses can tap into the segment of aspirational Indian middle-class citizens who may not be able to afford high-ticket items in one go.
A suite of affordable payment options, including a credit card EMI, can give you a competitive edge in the market.
It sets you apart from competitors who don’t offer this convenience. Customers are likelier to choose your business over others if they can pay in instalments.
Increase average transaction value
EMI encourages customers to upgrade to higher-end products or services because they can spread the cost. This can lead to an increase in the average transaction value, directly impacting your bottom line.
Customers with a positive EMI experience with your business will likely return for future purchases. EMI builds customer loyalty, and loyal customers are valuable assets for any business.
Reduced risk of bad debt
As per a recent survey, India makes almost 49% of its B2B sales on credit, and the level of bad debt written off as uncollectable customer remain high across industries, with almost 8% of B2B invoices turning into bad debts.
When customers opt for EMI, the risk of non-payment is shifted to the credit card company, reducing the likelihood of bad debt for your business. You receive the full payment upfront, minus any processing fees.
Setting up credit card EMI options can be straightforward, especially with the help of a payment service provider like Plural. We give merchants the option to offer their customers credit card EMIs along with a suite of affordable payment solutions.
Companies like Reliance Digital have added tremendous growth to their revenue with our Affordability Suite.
Implement credit card EMI in your business via the Plural’s Affordability Suite
Unlocking the potential of credit card EMI for your business has never been simpler than with the Plural Affordability Suite. This cutting-edge payment solution seamlessly integrates credit card EMI options into your payment ecosystem, providing a hassle-free way for customers to manage their expenses and make larger purchases.
Beyond credit card EMI, the Plural Affordability Suite offers an array of flexible payment choices to cater to diverse customer needs, such as debit card EMIs, cardless EMIs, No-cost EMIs, Pay Later, etc. Additionally, our brand EMI partnerships enable you to collaborate with specific brands, offering customized EMI plans that attract brand enthusiasts and elevate your product offerings. With our promotions engine, merchants can create endless combinations of offers – bank and brand EMIs on single/multi-cart and more.
Don’t miss the opportunity to make your products or services more accessible, appealing, and budget-friendly to many customers. Integrate Plural Affordability Suite and start offering flexible EMIs now. Want to get started? Reach out to us.
Amrita Konaiagari is a Marketing Manager at Plural by Pine Labs and Editor of the Plural blog. She has over 10 years of marketing experience across Media & Tech industries and holds a Master’s degree in Communication and Journalism. She has a passion for home décor and is most definitely a dog person.