Digital payments leader – Ezetap recorded a steep increase of 220% (year-on-year) in the transactional volume of Equated Monthly Installments (EMI) in July 2021 as compared to February 2020. This has been attributed to the ongoing COVID-19 pandemic, which has impacted the buying ability of consumers across India.
Due to this, customers either avoid single bulk payments for higher priced products or altogether shy away from purchasing them. And this has, in turn, affected sales across brands and created a vast need for affordability solutions for customers across various sectors. EMI volume as part of total transactions has increased to 18%, in the mobile and consumer durables segment, as compared to 9% in the pre-pandemic period of March 2020. This indicates a growing inclination of consumers towards affordability solutions which help increase their purchasing power. It also indicates that EMI or affordability presents a massive opportunity for brands to grow their sales across diverse product segments.
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% in some non-metro cities in addition to the metro cities. We have been able to reduce the transaction time by nearly 80% 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.”
According to Ezetap, Delhi was the leading metro city with an increase of 258% in total EMI volume followed by Bengaluru clocking a growth of 206% as compared to February 2020. Ezetap’s data indicates that there has been a significant increase in adoption of EMI volumes. Ahmedabad and Pune registered growth figures of 230% and 210%, 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.
Ezetap says a major reason for the steep increase in EMI transaction volume has been a surge in debit card EMIs. Debit card EMIs have shown significant growth with nearly 25% contribution in the total EMI volumes. As per the Reserve Bank of India data for March 2021, there was 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.
The company has been offering instant EMIs via credit and debit card that have helped in bringing big-ticket purchases well within the reach of consumers. It is interesting to note that the average ticket size of EMI transactions recorded by Ezetap has increased from INR 18000 in February 2020 to INR 32000 in July 2021. In a move to expand the benefits of EMIs, Ezetap 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 tier-3 cities. Nearly 50% of Ezetap EMI transaction volume can be attributed to no-cost brand EMIs.
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. Ezetap has also partnered with Xiaomi to provide the benefit of EMIs to their customers across the country. As a direct result of these customer-centric initiatives by the brands to improve the affordability, EMI transactions have seen a whopping increase across the country.
Furthermore, Ezetap has formed strategic partnerships with leading banks in the country including Axis Bank, HDFC Bank, Citibank, State Bank of India, American Express, Yes Bank and ICICI Bank to provide ease of using credit as well as debit card for EMI transactions to more and more retailers.