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Next time you order a smartphone with online credit, cautiously order it in the morning usual hours and not midnight. Chances are that your loan just might be rejected because it’s midnight.

Queer it may sound, but this is done to keep a check on the fraudsters who prefer odd hours to make purchases online. Online credit and deferral payments have been a growing trend among young online shoppers.

The range of these credits varies from Rs 500-1.5 lakh. Startups like ePayLater, Simpl, PayU and ZestMoney offer these services which allow the online buyers to make purchases instantly and pay their bills later with zero or a minimal interest. The age group usually varies from 22-35. “I love the pay later option. It lets me check out very quickly and I don’t have to wait long for mobile wallets or enter debit card details,” says 22-year-old Shailaja Kabra, an MBA student of Christ University.

Estimates say that cart abandonment rate on e-commerce portals in India can be a high 60-70 per cent, who intend to buy the product but fail to transact due to multiple reasons. Startups such as ePayLater, Simpl and PayU which allow one to purchase and pay later see an average ticket size of around Rs 700-900 and allow users to pay it within 15 days with zero interest. On the other hand, ZestMoney which works like an online credit card offers larger credits with a minimum interest.

These loans that range between Rs 3,000 and Rs 1.5 lakh are approved within few hours depending on the customer profile. The average ticket size for ZestMoney is around Rs 20,000. Simpl has partnered with companies like BookMyShow, Faaso’s, FreshMenu, Box8 and Zipgo. Similarly, ePayLater has partnered with PVR, Crownit, Indiamart, IndustryBuying and vareorganic while ZestMoney has tied up with Overcart, Credr, Velvetcase and Cuemath. Notably, PayU also acquired a minority stake in Bengaluru-based ZestMoney earlier this year.

“We started the pilot programme on deferral payments in March and are planning to invest $50 million in it over the next couple of years,” says Jitendra Gupta, MD, PayU India. He further adds, “We target tech savvy users who transact between Rs 500 and Rs 2,500 online and the credit could extend upto Rs 10,000. We want to provide them a similar payment experience like a privilege at airport check-in if you travel frequently.”

Lizzie Chapman, ZestMoney CEO, says, “Many consumers do not have a credit score as they have not taken loans earlier and so studying their behaviour becomes critical.” “Their general financial health and behaviour while filling our online form, the category of products they are trying to purchase, gender, location are some of the data points we use. The idea is to understand their behaviour and calculate the risk.”

These companies heavily rely on analytics and machine learning to understand a customer’s online behaviour and purchase patterns so as to avoid fraudsters. Talking to ET Tech, Akshat Saxena, founder of ePayLater, said, “The limit of credit depends on a cutomer’s credit worthiness but mostly we cap it at Rs. 10,000. Based on factors like social media, transaction history we decide the credit score of a customer and a credit is given.” He further adds that ePayLater witnessed a steep growth after demonetisation. “In the last 3 months, we have grown around 200 per cent on a monthly basis.”

 He also notes that non-metro customers who are usually accustomed with cash on delivery, are keenly adapting online credit these days. Nitya Sharma, co-founder of Simpl, says, “Using this mode of payment cart, conversions have increased up to 85 per cent but more importantly the transaction leads to a relationship.”
 Simpl handles around 11-12k transactions in a day. Moreover, Nitya adds that these transactions spike up from Wednesday to Saturdays as well on occasions like Diwali and Christmas when big movies hit the screens or family outings are planned.
 Both Simpl and ePaylater have partnered with NBFCs who manages the cost of capital or interest that accrues on the micro credit.
“Not every buyer can use Simpl and it depends on the customer’s online profile. In addition if a customer delays or fails to pay they are ousted from the system,” adds Nitya.

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