Festival shoppers are increasingly turning to EMIs and other affordability options for high-value purchases, especially beyond metro cities.
Key Points
- Flipkart expects one-third of its mobiles, large appliances, and electronics gross merchandise value (GMV) during the festival season to be driven by EMI options.
- Cardless EMI is particularly popular in Tier-II cities and beyond, democratising access to credit for customers without credit cards.
- Payment methods vary with purchase value, with UPI preferred for low-value transactions and credit card EMIs becoming crucial for purchases above ₹20,000-30,000.
- During peak festival periods, Flipkart experiences a 1,000x increase in payment requests, highlighting the need for robust payment reliability.
As the country gears up for the festival shopping season, affordability is likely to play a bigger role for customers making high-value purchases.
Gaurav Arora, vice-president of payments and SuperCoins at Flipkart said the e-commerce company expects around one-third of its mobiles, large appliances, and electronics (MLE) gross merchandise value (GMV) to come via the equated monthly installment (EMI) route.
"Around one-third of MLE GMV comes through EMI options, with continued growth expected through the festival season," Arora said.
Nearly half of high-value electronic purchases are expected to be enabled through affordability constructs, he added.
Expanding Affordability Options
On Flipkart, customers have payment access to credit card EMI, debit card EMI and cardless EMI, supported by multiple banks and non-banking financial companies (NBFCs).
Additionally, other affordability options include Flipkart EMI and SuperPay.
According to Arora, of all options, cardless EMI sees a strong uptake among consumers in Tier-II cities and beyond.
";A lot of our affordability propositions, especially cardless EMI, have a very high uptake in Tier-II plus customers," Arora added.
"This is because these are customers who don't have the luxury of having a credit card. So, they really prefer taking some of these cardless EMI options that we are giving. It's just access.
"We are democratising access to credit to just a much larger coverage there."
Evolving Payment Preferences
The payment method customers choose also varies with the value of the purchase.
Arora said low-value transactions continue to see a strong preference for UPI, while the payment mix starts changing as the ticket size rises.
He added that around the ₹5,000 mark, customers increasingly move towards credit cards.
Affordability options like credit card EMI become more important for purchases in the ₹20,000-₹30,000 range and above.
Ensuring Payment Reliability During Peak Season
Festival shopping also results in a sharp increase in transaction volumes.
According to Arora, during the peak period, Flipkart sees payment requests from banks rise nearly 1,000 times compared with a normal day.
"During the peak festival season, we handle 1,000x more payment requests than the business as usual (BAU) period."
The surge, driven by consumers making large purchases, also increases the importance of payment reliability, as banks, payment gateways and telecom operators face a sudden spike in traffic.
To that effect, Flipkart has been pushing biometric authentication as one way to address some of these challenges.
Around 30 per cent of Flipkart Axis Bank co-branded card transactions are now authenticated using biometrics.
And, across banks where biometric payments are enabled, around 23 per cent of transactions use biometric authentication.
"Biometric-authenticated transactions are seeing a 12-15 per cent higher success rate compared with OTP-based transactions," Arora said.
Impact of Gifting Trends
The festival payment mix is also being influenced by the growth of gifting.
Flipkart's gifting category has grown more than 60 per cent year-on-year (Y-o-Y), led by business-to-business gifting, while individual gift-card demand predominantly comes from non-metro, Tier II and III markets.
Feature Presentation: Rajesh Alva/Rediff
