Down Payment on EMI is an affordability feature that provides businesses with a comprehensive payment solution, enabling their customers to make a down payment for a purchase and pay the remaining amount through convenient EMIs.
This solution offers several advantages:
- Reduced interest for the end consumer: EMI payment done with a down payment ensures that customers pay lesser interest vis-a-vis paying the entire transaction amount into EMIs.
- Reduced Cost of Subvention: Merchants or Brands running subvention offers will have to bear lesser subvention cost in comparison to the case where the subvention needs to be offered on complete product price
- Improved conversions: Customers get inclined to make purchase of high ticket size products when presented with EMI options along with a Down payment
- Optimized Transaction journey: A superior customer experience is offered by collecting a single authorisation for processing both the down payment and subsequent EMI payment.
Example
A comparison between EMI transactions with and without down payment for Rs. 50,000 order with tenure of 6 months and Interest rate of 16%. For Down payment flow, a 20% down payment is considered.
|
EMI without Down Payment |
EMI with Down payment |
Remarks |
|
|
Order Amount |
Rs. 50,000 |
Rs. 50,000 |
|
|
Down payment amount |
NA |
Rs. 20,000 |
Down payment is processed as Full swipe transaction |
|
Loan amount |
Rs. 50,000 |
Rs. 30,000 |
|
|
Interest amount (16% ROI, 24 months) |
Rs. 8,756 |
Rs. 5,253 |
Reduced interest for EMI with Downpayment |
|
Total Payable amount |
Rs. 58,756 |
Rs. 55,253 |
Note: For EMI with a Down payment, Rs. 50,000 will be authorized on the customer’s Credit card. From the authorization, Rs. 20,000 will have to be paid by the customer to issuing Credit card as per the next billing cycle. Rs. 30,000 will be converted into the EMI by the issuing card
