The Mobile Store to offer EMI option through debit cards
June 15 2013
By : Writankar Mukherjee
KOLKATA: Equated Monthly Installment (EMI) payment option, which has emerged as the biggest consumer promotion bait for high-end phones and several other products, will soon be available on debit cards, thanks to a technology being co-developed by The Mobile Store.
The country's largest mobile phone retail chain with more than 800 outlets has developed a technology along with Bangalore-based Innoviti Embedded Solutions to offer monthly installment payment option on debit cards from next month.
Currently EMI schemes are available on credit card payment or by issuing post-dated cheques to consumer finance companies.
"At present, almost 30 per cent of our sales are derived on EMI schemes based on credit cards, which can grow exponentially when we start EMI on debit cards," The Mobile Store CEO Himanshu Chakrawarti said.
This is because the debit card consumer base in the country at 200 million is ten times that of credit cards.
The Mobile Store, which is 90 per cent owned by the Essar Group and 10 per cent by ILFS, and Innoviti Embedded Solutions have jointly applied for patenting of the transaction method, entitled 'A method for real-time distribution of credit on a savings account at a merchant location'.
They plan to earn royalty income by offering this as a solution to other retailers.
Chakrawarti said the two have applied for patenting five different ways of undertaking debit card EMI transaction.
All a consumer has to do is swipe her debit or ATM card at the shop and sign a mandate form to convert the total transaction amount into equal monthly installments for a certain tenure agreed upon. At the time of the swipe, the first installment will be withdrawn from the consumer's account person will be charged for the first EMI at the time of swipe and the balance will be deducted from her bank account in equal monthly installments.
The Mobile Store, along with the bank that issued the debit card, will determine the eligibility for EMI credit to a consumer based on the savings account history, fixed deposits, salary history and other loans.
Chakrawarti said the technology can have a significant impact on sales of high-value consumer items. "The potential is huge in our industry since almost 70 per cent buyers of high-end smartphones costing above Rs 20,000 still buy them on cash," he said. "We would offer this option on phones costing above Rs 5,000 or so."
The Mobile Store was one of the earliest retail chains to start offering EMI payment option on credit cards and had early this year launched Apple's hugely successful EMI scheme on iPhone that immediately helped its sales increase three times.
The retail chain lately turned around its operations and achieved EBITDA profitability since the last four months. It had shut down or relocated over 300 unprofitable stores in the last two years.