A Complete Guide to No Cost EMI to Help You Get Started

No Cost EMI Guide - Paytm for Business

Paying for products or services in easy installments or EMIs is nothing new in this world. Retailers selling big-ticket items have allowed their frequent customers to avail this facility for decades. But with the pandemic adversely affecting the buying ability of consumers in India, the need for affordable payment solutions has come up across different sectors. The expected rise of Buy Now Pay Later adoption in the country at the rate of 28.9% CAGR during 2021-28 seems to have resulted in No Cost EMI as a byproduct.

Let’s cover what no cost EMI means and how it can benefit your business. 

What is No Cost EMI?

A no cost EMI is a popular payment scheme offered by merchants (both online and offline) to allow their customers to pay for their purchases in EMIs spread over a repayment period. What makes it an irresistible proposition for the end consumers is 0% interest charged over the total amount, hence the name. While most EMI options charge interest at a high rate, this alternative comes with no interest fee. 

For example, if a customer buys a product worth Rs. 21,000 and wishes to opt for a 3-month no cost EMI plan, he/she will only need to pay Rs. 7,000 every month. 

You should also know that some merchants may ask the customers to pay processing fees or file charges to avail of this facility. These terms and conditions may vary from one merchant to another, depending on how they choose to fund the no cost EMI option.

Wondering how you, as a merchant, can make your customers avail of no-cost EMI plans? Continue reading. 

How does no cost EMI work?

With a no cost EMI option available on your online store, you allow the customers to pay the total purchase amount into certain EMIs without charging any interest. In most cases, the online merchants show that the calculated interest is waived off as a discount on their cart value, thus splitting the total amount without any additional charges.

Consider the following example to understand how no cost EMI offering works in general:

A customer chooses to buy a product worth Rs. 27,000. As per the terms, the 3-month EMI plan comes with an interest rate of 10%. It means that if he chooses this plan, he will need to pay Rs. 9,000 + 900 (= 9,900) as the first EMI. 

However, with the no cost EMI offering, the merchant will show that they are giving a discount that equals the interest charged over the three month period, hence keeping the total repayment amount to be the same (Rs. 27,000 in this case). 

Advantages/benefits of no cost EMI for customers

Depending on the type of product/services you sell, you can make it easier for customers to buy from your online store by offering no cost EMI option. Given below are some of the main advantages of no cost EMI for the buyers:

  • Easy to buy big-ticket items at affordable EMIs

Whether it is for regular household needs or special occasions, certain expenses are inevitable. Many customers put the decision to buy an expensive item like a smartphone, refrigerator, etc. on hold because of the impact it can have on other expenses and savings. 

With a zero cost EMI option available on your online store, you can allow your prospective customers to buy from you without worrying about the total cost to be paid upfront. 

  • Zero interest payable

In general, the interest component already acts as a significant part of the payouts handled by an earning individual. Whether it is a home loan, personal loan, or vehicle loan, people are already paying a hefty sum every month as interest over the repayable amount. This is why adding another interest element related to a purchase may feel challenging.

With zero cost EMI, you allow such individuals to buy from you without paying any additional interest on the purchase amount. 

  • Easy online availability 

Traditionally, most banks now extend no cost EMI options to online shoppers who have stable financials. Depending on the payment partner you choose and the creditworthiness of your customers, no cost EMI option is easily available for online shopping these days.

What customers can buy using no cost EMI?

Depending on the availability of this payment option while shopping online, customers can buy the following things:

  • Smartphones
  • Laptops
  • Expensive clothing and accessories
  • Furniture
  • Holiday travel packages
  • Online learning courses, and more

How can no cost EMI help you grow your online business?

If you are struggling to grow your online business, it is important for you to consider various ways to attract customers to your store. Whether you sell high-priced or budget-friendly products online, you can make them more affordable to the customers by offering a no cost EMI facility.

Extend bank EMI offers to your customers with Paytm Payment Gateway

Most banks run EMI offers to allow their cardholders to benefit from buying different types of products online. If you want to extend such offers to attract more customers to your online shop, switch to Paytm Payment Gateway. 

With Paytm Payment Gateway, you can benefit from the EMI subvention facility and provide your customers an option to pay the total amount in easy equal installments at a 0% effective interest rate. To know more about our EMI subvention feature and its integration steps, click here

Also Read: What Makes Paytm the Best Payment Gateway in India?


When is no cost EMI the right option for purchase?

Your customers can select this payment option when they want to buy an expensive product but do not have enough cash for upfront payment.

How does zero cost EMI differ from a regular EMI scheme?

With regular EMI schemes, the customers are bound to pay the interest component along with processing fees if any. On the other hand, no cost EMI simply means interest-free EMI payment.

How is no cost EMI calculated?

The no cost EMI is simply the result of dividing the total amount payable with the number of months for which a customer chooses to pay the EMIs.

Which payment methods can be used for no cost EMI?

Ideally, this is available with credit and debit cards issued by major banks in India.


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