220% growth in EMI transactions since the pandemic outbreak

With severe disruptions caused by the pandemic, the buying ability of consumers across India has been significantly reduced. Due to this, the customers either avoid single bulk payments for higher priced products or altogether shy away from purchasing them. This has impacted sales across brands and created a vast need for affordability solutions for customers across different sectors.

Ezetap, a digital payments leader, recorded a steep increase of 220 percent (year-on-year) in the transactional volume of Equated Monthly Installments (EMI) in July 2021 as compared to February 2020. EMI volume as part of total transactions has increased to 18 percent, in the mobile and consumer durables segment, as compared to nine percent in the pre-pandemic period of March 2020. This indicates a growing inclination of consumers towards affordability solutions which help increase their purchasing power. This also indicates that EMI or affordability presents a massive opportunity for brands to grow their sales across diverse product segments. Delhi was the leading metro city with an increase of 258 percent in total EMI volume followed by Bengaluru with growth of 206 percent as compared to February 2020. The data also indicates that there has been a significant increase in adoption of EMI transactions in non-metro cities with a combined contribution of 59 percent in the total EMI volumes. Ahmedabad and Pune registered growth figures of 230 percent and 210 percent, respectively. This shows that affordability solutions play a positive role in impacting sales across product categories, not only in the metro cities, but also across Tier 2 and 3 cities. This may be partially attributed to the fact that a large portion of the working population have moved back to their hometowns due to work from home models, and have contributed to EMI sales in their respective hometowns.

A major reason for the steep increase in total EMI transaction volume has been a surge in debit card EMIs. According to the study, Debit card EMIs have shown significant growth with nearly 25 percent contribution in the total EMI volumes. As per Reserve Bank of India (RBI) data for March 2021, there were 898.2 million debit cards in India as compared to 62 million credit cards. Earlier, EMIs were available only on credit cards, which have a limited penetration in non-metro cities in the country. However, with EMIs being offered on debit cards, even the customers from tier-2 and tier-3 cities can now benefit from this affordability option.

It is interesting to note that the average ticket size of EMI transactions recorded by Ezetap has increased from Rs 18000 in February 2020, to Rs 32000 in July 2021. In a move to expand the benefits of EMIs, it has also tied-up with ZestMoney to provide Non-Banking Financial Company (NBFC) EMIs that would help retailers enable high-value purchases for new-to-credit customers. NBFC EMI allows retailers to upsell their products by enabling easy NBFC financing options to cardless customers.

Another factor for the large-scale uptake of EMIs is no-cost EMI offers and vouchers extended to customers by various brands. This has expanded the buying capability of their customers and shows that affordability solutions play a positive role in impacting sales across product categories in metro as well as Tier-2 and 3 cities. Nearly 50 percent of Ezetap EMI transaction volume can be attributed to no-cost brand EMIs. In fact, as a market trend in the mobile and consumer durable space, there is at least one card offer being rolled out by brands as part of their product launch campaign. This helps drive more sales, as it makes the product affordable and provides value-for-money to its buyers. Commenting on it, Byas Nambisan, CEO, Ezetap, said, "The growth in EMI transactions clearly reflects the trend of customers avoiding bulk payments and preferring affordable payment options to reduce the burden. It is promising to see strong growth of over 200 percent in some non-metro cities in addition to the metro cities."

We have been able to reduce the transaction time by nearly 80 percent and eliminate the manual errors with EMI integrated into the merchant's billing POS. We will continue our efforts to provide the retail businesses with robust and integrated Buy Now Pay Later solutions, like EMIs, to improve the purchasing power of their end customers, he added.