Even though the option to use EMI’s to pay for purchases made using credit cards has been around for years, its adoption has not seen much success. Now, however, according to Vijay Jasuja, the CEO of SBI, the adoption rate has gone up by as much as 200%. In his interview Mr. Vijay also said that they had noticed that the age demographic most likely to adopt the EMI option was the cardholders who were 25 years old or younger.
One cause for such an increase could be the recent demonetisation of Rs 500 and Rs 1,000 notes. It has been reported that this demonetisation has led to an increase of 40% in cashless transactions involving credit cards. Even small vendors, who used to earn most of their daily income in cash, have been switching to PoS machines to make it easier for customers to pay for their services and goods. Banks have also been offering credit card holders the option to convert their outstanding balances into EMI’s to make paybacks easier.
The positive side of such an increase can be the fact that it moves the country closer to a cashless economy which makes purchasing more convenient. Another positive effect of such an increase is that the e-commerce industry can expect to see a growth in business since they also offer EMI on purchases made using specific cards. Even banks can look forward to a growth in income as EMI’s, just like loans, come with an interest rate. However, there could be a downside to this as well, and that would be an increase in credit card debt caused by unchecked spending.