Why no-cost EMI is a must-have for festive success

Introduction

Diwali is a festive time, not just for shoppers but for the brands as well. The Business Standard reports that this year, Indians are estimated to spend approximately Rs 1.85 trillion during Diwali ’24.

How do brands keep up with this high-demand festive splurge? There is a growing demand to facilitate smoother, quicker payment options such as BNPL, mobile-based contactless payments, and no-cost EMIs. Among this long list of payment methods, no-cost EMIs trump the choices this festive season. This is because of seven key reasons.

Let’s explore the reasons why no-cost EMIs are a business essential for festive success in more detail.

What is no-cost EMI?

No-cost EMI (also known as zero-cost EMI) is a financing option that allows your customers to purchase their favourite items on EMI but without any interest. The payment is divided into equated monthly instalments and no additional charges are applicable.

While zero-interest EMIs cannot technically be offered, there is a simple catch to how this payment choice works—businesses bear the interest cost!

Suppose you are supposed to pay a total interest of Rs. 10,000. The business you are buying the product from will give you a straight discount of Rs. 10,000 at the time of purchase, nullifying the interest amount.

No-cost EMIs work in the following way:

  • The business will offer an upfront discount on the EMI interest to the buyer.
  • The total price of the item will then be divided into equal amounts spanning over the term of no-cost EMI chosen. For example, INR 6,000 would be divided into equal instalments of INR 1,000 for a term of 6 months.
  • Each month, the customer will make the divided payment by a set date. They don’t have to pay the interest. At the end of the term, the total amount the customer pays will be equal to the price of the item.

This is the principal reason that no-cost EMI is more attractive to shoppers—they don’t have to pay anything extra over the price of the item at the time of purchase! In traditional EMI options, the customers pay a fixed interest, so the total amount at the end of the tenure is actually greater than the cost of the item purchased.

7 reasons you should enable no-cost EMI this festive season

India’s festive season has always seen a shopping spree for the nation. People like to buy gifts, home improvement items, electronics, and clothing to celebrate the festival in a grand manner. According to a Rediffusion report highlighted by Financial Express, 2024 is going to be grander, with 36.18% of people planning to spend more than last year.

That being said, as retail businesspersons, it is essential to prepare your outlets for the splurge season with no-cost EMIs. Here are seven compelling reasons you should consider incorporating this payment method into your commerce ecosystem:

1. Appeals to budget-conscious shoppers

Empower your budget-conscious target audience to complete premium purchases by making them affordable through no-cost EMIs. This way, you will be able to:

  • Sell higher quantities of premium items.
  • Increase customer satisfaction by providing them with budget-friendly shopping choices and payment options.

As a result, it helps you enhance customer loyalty in the long run and also increases sales during the festive season.

2. Increases conversion rates

No-cost EMIs are an excellent option for making high-end items seem more affordable to the masses. When customers realise that they are not required to make the full value down payment immediately and that the amount can be distributed over a longer term, it increases their purchasing power and intent.

This ultimately helps you convert more browsing consumers into paying customers.

3. Boosts average order value

Average order value is the metric that defines the average minimum amount that your customers spend at your store each time they visit.

With no-cost EMI, customers have increased purchasing capacity and can make higher purchases without straining their budget. This allows you to sell more of the high-consideration items by dividing the total cost over a period of, say, 6 or 12 months.

4. Increases loyalty

Providing no-cost EMIs can boost customer loyalty.

Why? Because a no-cost EMI will assure your customers that the items in your store are affordable and within their purchasing capacity. Whenever they wish to make a high-consideration purchase, your store is the first destination they will visit to assess the financial benefits.

You may get many more repeat customers when you decide to facilitate no-cost EMIs even beyond the festive season.

5. Low risks, high rewards

Banks or payment providers (like credit card companies, BNPL apps, etc.) often partner with businesses to offer no-cost EMIs. In a bid to boost their own usage, they sometimes absorb part or all of the interest fees to make the EMI option free for the customer. 

This means you don’t have to carry the full financial burden of offering interest-free payments. Thus, you have the opportunity to boost your sales while simultaneously establishing a new revenue stream through profit-sharing models with the issuing banks or payment providers.

6. Competitive edge

The retail world today is fraught with tough competition, which requires business owners to think on their feet. No-cost EMI is an excellent tool to get ahead of your rivals by empowering customers to shop more with your brand.

It is also ideal to bring more banking institutions on board with your retail chain, which will give your customers more EMI bank options than your competitors.

7. Attracts new customers

Retailers that offer no-cost EMIs enjoy significantly higher customer satisfaction. Their customers talk about their offers with their family and friends, bringing more customers to your doors. Word of mouth is an excellent way to gain new customers in the festive season.

What’s in it for the customers?

No-cost EMIs increase sales for businesses, but it is the customer who gains the maximum benefit from such schemes:

  • They can buy premium items at affordable prices.
  • They can plan their finances more wisely and distribute a large payment over a few months.
  • They enjoy increased purchasing power and more options when shopping for items.

Plural by Pine Labs: Powering your payments infrastructure

No-cost EMI is not a complicated procedure that requires a technology overhaul. With convenient platforms like Plural by Pine Labs, easily incorporate it into your systems with just a few clicks.

Plural’s Affordability Suite integrates multiple payment options—including no-cost EMI—into your checkout process with a simple setup process. You can also apply your customisations and branding to the entire checkout flow and deliver seamless customer experiences at every step of the buying process.

The best part? You can design personalised offers and track sales in real time with Plural to enhance customer satisfaction and increase sales.

Contact us today to learn more about how Plural can help shape no-cost EMI strategies for your business!

Plural by Pine Labs has received an in-principle authorisation from the Reserve Bank of India (RBI) to operate as a Payment Aggregator.

Scroll to Top