In this era of rapid commerce, enterprises continuously innovate payment methods to offer customers more incentives to shop. Debit card EMI is one such innovation that has revolutionised the world of commerce.
Debit card EMIs allow card owners to pay for high-value items in instalments without needing a credit card or a credit score, which makes them quite popular with shoppers.
According to a report in The Financial Express, EMI transactions increased by 220% between 2020 and 2021 and are still going strong.
The purchasing power of Indian consumers is increasing. Statista reports that consumer spending across the country amounted to INR 24.57 trillion in Q2 2024. To further corroborate this statistic, an S&P Global Market Intelligence forecast shows that this consumer spending is expected to grow by at least 7% in the next five years.
Let’s explore how businesses can leverage debit card EMIs to gear up for this commerce boost.
Why is Debit card EMI a game-changer for Indian consumers?
Debit card EMIs benefit not only the customers by enhancing affordability but also businesses by bringing a wider audience within access.
Benefits for the customers
Debit card EMIs let your customers enjoy a great shopping experience:
- Financial flexibility: Customers can break the payment amount evenly over several instalments, allowing them to make high-value purchases without straining their budget or financial plans. It also increases their purchasing power and living standards.
- Instant approval: The approval process is smooth and straightforward because instalments are paid using debit cards (not credit cards). Once a shopper is deemed qualified, the disbursal is nearly instantaneous.
- No- or low-cost EMI options: Removing the burden of interest rates from EMI options significantly enhances your customers’ shopping experience. Debit card EMIs can be designed at a low- or no-cost cost to customers, improving their purchasing power.
- One card to buy it all: The availability of the right payment methods often influences customers’ purchase decisions. With debit card EMIs, customers can make installment-based payments without needing more cards or KYC processes, simplifying their shopping experience.
- Adds to credit score: Debit card EMIs are loans reported to the credit bureau. Therefore, paying for their debit card instalments on time helps customers build their credit scores, especially if they are low.
- No collateral needed: Debit card EMIs are risk-free because collateral is not required, unlike a regular loan, where customers need to provide security in exchange for the loan.
- No hidden charges: Debit card EMIs typically do not have any hidden charges as the customers are already aware of the applicable interest rate. The instalment value is calculated accordingly, making the whole process transparent.
Benefits for the merchants
Businesses reap several critical benefits by providing debit card EMIs:
- Cater to a wider audience: Over 27% of Indian consumers own a debit card (while only 5% own a credit card). By providing debit card EMIs at your stores, you can tap into a wider audience base and boost your sales.
- Gain new customers: Customer acquisition can be challenging when your store offers limited payment options. Debit card EMIs are rising; enabling them at your store can help you gain new customers while controlling the acquisition costs.
- Boost sales: Debit card EMIs boost sales by enhancing customers’ accessibility to more items across your stores. It improves the purchasing power of your customers and boosts your sales.
- Competitive pricing: By offering low- and no-cost debit card EMI options, you make pricing more agreeable for customers and improve your brand’s competitiveness in the marketplace. 67% of customers abandon their purchases because of a lack of preferred payment methods – debit card EMI can help you solve this problem.
- Increased transaction value: Debit card EMIs increase the average transaction values at your store because they enhance your customers’ buying capacity. For example, if a customer previously could not purchase goods worth INR 20,000 at your store through online payments, they may purchase if 10 instalments of INR 2,000 each through debit card EMI are offered.
- Repeat business: Customers prefer to shop with brands that allow them financial flexibility with payments. Debit card EMI can help you gain customer loyalty by offering flexible payment terms and arrangements.
- Reduced risk of bad debt: Debit card EMIs are paid on the money a customer already has in their bank account, reducing the risk of bad debt that usually accompanies credit card payments.
How does debit card EMI work?
A debit card EMI works in the same way as any other traditional credit card EMI. When a customer selects to pay through debit card EMIs, the following processes happen:
- The total amount to be paid is divided into equal instalments and added to the customer’s debit card statement. Customers’ banks manage this as an overdraft facility that is available to them.
- The bank pays the business on the customer’s behalf. The customer must pay this sum to the bank in equal instalments via EMIs.
- The bank collects this money from the customer’s savings account with them as EMI by deducting them automatically each month, just like a recurring payment.
- The customer does not have to worry about missing a payment and accumulating bad credit scores.
Expand your audience with debit card EMI
Debit card EMIs are a crucial payment mechanism for businesses to stay competitive in modern commerce. Leverage Plural by Pine Lab’s Affordability Suite will help you add this payment method to your checkout seamlessly.
Plural’s Affordability Suite offers debit card EMIs as a key payment method along with cardless EMIs, brand EMIs, bank EMIs, and more. The suite consolidates your brand’s offers, discounts, cashback, etc., into one checkout flow that your customers can easily complete.
Furthermore, you can use brand-exclusive offers to elevate your customers’ checkout experience. The Affordability Suite is more than just a checkout interface; it is an indispensable tool to improve customer convenience and brand loyalty.
Talk to us to know more.
