Fintech firms push digital EMIs to new offline frontiers

Fintech firms are piloting instant loan products and expanding the scope of their digital equated monthly instalment (EMI) products at offline stores, as demand for credit continues.

Digital EMI, or ‘Buy Now Pay Later’ credit products, were largely offered offline at white-good and electronic stores. This model, pioneered by companies such as Bajaj Finserv Ltd, is now seeing traction in newer segments such as auto dealers, fashion retail stores, restaurants and small-town traders, with banks more comfortable with small loans.

Banks deployed debit card-based EMIs as metro customers went to their hometowns. Smaller cities are also warming up to these credit offerings. Retail brands have also joined banks and are willing to offer customers credit for purchases, absorbing the interest rates on zero-cost EMIs.

“Contrary to the aspirational upper middle class customers, which would take EMIs at offline purchase points to upgrade their buy, there is a new category of ‘need-based’ customers coming now, as covid and work-from-home has increased dependence on electronics. Hence, paying for purchases in instalments is finding more viability,” said Rajeev Agrawal, founder and chief executive officer (CEO) of enterprise payments solutions provider Innoviti.

Buy Now Pay Later-based purchases were up by 30% this October compared to the same period last year, for Pine Labs, which is said to have a lion’s share among fintechs in the offline EMI market. Cities that are in Tier 2 and beyond account for 54% of the overall transaction value of EMI products on its platform.

“With covid, the need for electronics, smartphones and white goods has shot up, leading to a 50% increase in average basket sizes. Individuals are buying more on EMIs and trying not to spend it all at once,” said Kush Mehra, chief business officer, Pine Labs.

Pine Labs has, over the past year, also launched products such as Instant EMI for smaller ticket sizes, which allow users to scan the company’s QR code at merchant locations and avail instant credit for basket sizes above ₹5,000. It has already enabled 50,000 merchant touch points with its Instant EMI product and has provided EMI solutions across 150,000 merchants in the country.

Pine Labs’ competitor Mswipe joined the rush and launched its digital EMI platform in October after piloting it for nearly two years. Mswipe’s EMI platform takes a brand-centric marketplace approach and allows brands to push offers at its offline merchant network and provide customers zero-cost EMIs, to push inventory faster at offline retail points.