Demand for credit, EMI services soars

With online festive sales in full swing, e-commerce firms have seen a sharp uptick in credit products aimed at attracting small town shoppers eyeing high-ticket appliances.

In the first 24 hours of its ‘Great Indian Festival’ sale, Amazon India disbursed over Rs 600 crore of credit to customers through its ‘Pay Later’ offering. The e-commerce major said 3 out of 4 equated monthly instalment (EMI) shoppers were from Tier 2 and Tier 3 cities.

“This year Amazon Pay launched Amazon Pay Later that allows customers to shop with more affordability. We have seen 1 out of 3 air conditioners, refrigerators and more than 3.5 lakh phones being sold on EMI. This Great Indian Festival, every second shopper had access to EMIs that were enabled through partnerships with 24 banks and programs like Amazon Pay later,” an Amazon Pay spokesperson said.

Rival Flipkart said 1 out of every 5 purchase in segments such as mobiles, furniture and large electronics has been driven through EMI in its ongoing ‘Big Billion Days’ (BBD) sale.

It saw a 65% increase in EMI purchases compared to the 2019 festive sale in mobiles, laptops and white goods. More than 25% of appliances and electronics on Flipkart are being bought on EMIs.

“The pandemic has led to several categories such as mobiles and laptops emerging as an ‘essential’ of sorts for many. Our mobile category, in the first few days of BBD 2020, saw a 22% growth in customers adopting for product exchange,” said a Flipkart spokesperson.

Flipkart also saw a 1.5-times higher spend per customer across EMIs and Flipkart Pay Later transactions, with ‘no-cost EMI’, offers on Bajaj Finserv EMI cards and leading bank credit cards being key credit platforms for the e-tailer.

It also saw a 65% growth in customers adopting prepaid digital payment, compared to BBD 2019.

Both Flipkart and Amazon ramped up their credit offerings to customers before the festive sale by partnering with lenders like Federal Bank and adding mobile wallets like Paytm to help Tier 2 customers transact better on their platform.

While Flipkart, which has partnered with over 20 banks and financial institutions, was targeting nearly 70 million customers during festive season with its credit products, Amazon India aimed to reach more than 50 million buyers through its credit schemes.

“Pay Later solutions have seen a 50% year-on-year increase in EMI transactions during checkout on Amazon and Flipkart. Electronics, home appliances and mobile phones continue to be the largest category. Covid has globally changed consumer preferences for credit, with the ‘Pay Later’ option emerging as a preferred model of transaction. This can well turn out to be the ‘Whatsapp moment’ for digital credit in India,” said Lizzie Chapman, CEO and co-founder, ZestMoney, a credit solution available at checkouts on Amazon and Flipkart.

Fintech executives said pent up demand, along with insecurity of steady income flows, with layoffs and mounting health expenditures, has made Indian customers warm up to credit.

“Festive season 2020 will be a litmus test for retailers and new-gen payment companies. Fintechs are increasingly focusing on ‘Buy now, Pay Later’ with unique offerings which has led to a substantial uptick in EMI driven by increase in demand due to durables and mobile phones,” said Nitish Asthana, COO, Pine Labs //descriptor//.

In the July-September quarter, Pine Labs saw a 49% uptick in consumer transactions through its ‘Pay Later’ offering for consumer durables. It also saw a 15% increase in transaction value of payments made through EMI during the same period.

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