In an effort to extend credit to millions of Indians without credit cards or other desirable methods of short-term financing, Amazon has launched Amazon Pay EMI (“Easy Monthly Installments”) in India through a partnership with Bengaluru-based Capital Float. Per the Economic Times of India:
“Our aim is to target the next 70 million customers who are deprived of credit options while shopping on Amazon, they will be significantly benefitted by these easy EMI options especially with the festive season round the corner,” said Vikas Bansal, director, emerging payments at Amazon Pay…
“The advantage that Amazon can bring in is the huge customer base that we already have here, hence customer acquisition cost will be lower and we can pass off better rates to good borrowers,” said Bansal. “Also we will use our machine learning capabilities to reduce frauds which will also make loans cheaper.”
Amazon claims to be offering zero cost EMIs for customers taking the loan for a duration of three and six months. For those opting for the duration of nine and 12 months the rate of interest will be 18%.
India is a strategic growth market for Amazon, with intense competition from Walmart and others (Flipkart is aggressively pushing its Debit EMI product as well). Amazon has consumer data that should help it to assess credit risk and lower default and fraud rates. Extending credit to Indian consumers should help increase cart size and share of wallet.