Indian retail is undergoing a sea change. Consumers of today are no longer looking just for quality products at affordable prices; they expect hassle-free and flexible payment options too. The trend of consumer financing – from “buy now, pay later” to no-additional-cost EMIs – has transformed customer shopping behaviour and the business model of retailers. Many shoppers now also rely on an instant loan app to access quick credit and enjoy seamless purchasing experiences.
For retailers, staying in line with these financing trends is no longer optional. It can have a direct impact on sales, customer retention, and competitiveness.
Let’s consider the most important consumer financing trends that retailers need to know about and how they can shape the future of retail in India.
Why Consumer Financing Matters
India’s retail market is vast and wide. From expensive gadgets to everyday items, lending has enabled consumers to buy without the instant sting in the pocket. For smaller needs, a 10000 personal loan can offer quick financial support to manage purchases or urgent expenses with ease.
A buyer who would hesitate to buy a ₹40,000 smartphone on a cash down payment feels comfortable paying ₹3,500 every month for 12 months.
For the retailer:
- Increased sales conversions: Financing removes upfront cost hurdles.
- Increased basket size: Shoppers buy more when payment is convenient.
- Customer retention: Shoppers return to brands that offer flexible payment facilities.
The most impactful Consumer Financing Trends That Retailers Must Watch Out For
1. Buy Now, Pay Later (BNPL)
BNPL offerings have grown exponentially in India, especially among millennials. ZestMoney, LazyPay, and Amazon Pay Later are a few of the notable players who have made short-term credit available.
- Why it makes sense for retailers: BNPL draws people who seek instant gratification without having to pay cash up front. It facilitates impulse purchases and enhances conversion ratios, especially in online retailing.
- Challenge: Retailers have to select reliable BNPL partners, as increasing defaults might be risky.
2. No-Cost EMI Schemes
No-cost EMIs, typically offered through credit cards or NBFC tie-ups, remain the most popular financing in India. They are perceived by customers as cheap and interest-free, and therefore, purchasing big-ticket items is not as burdensome on the purse.
- Why it matters to retailers: It is no-cost EMIs for everything from phones to furniture. It increases affordability and accessibility across categories. For high-competition segments, such schemes can be a clincher.
- Challenge: Retailers must take the interest cost or split it with the finance partner, impacting margins.
3. Digital Lending Integration
The shift to digital-first experiences means financing becomes more integrated into the shopping experience. Online or offline, consumers can check eligibility, choose EMI plans, and complete the process within minutes.
- Why it’s important to retailers: Offering digital lending at checkout increases convenience and prevents cart abandonment.
- Challenge: Moneypal, Paytm, and others have to offer effortless, speedy, and secure integrations with fintech players to avoid consumer discontent.
4. UPI and Micro-Credit Options
UPI has already transformed payments in India, and micro-credit via UPI is being widely embraced. UPI-linked small-ticket credit allows customers to purchase something on the spur of the moment without cash or credit cards.
- Why it matters for retailers: This trend will make low-value retail products even more affordable. It matters most for the mass-home category, daily use categories, where convenience is preferred.
- Challenge: Acceptance and awareness are still growing, and hence, the retailers need to undertake active education of customers.
5. Rise of Rural and Semi-Urban Financing
Financing is not metro city-focused anymore. With digital outreach and government-supported financial inclusion efforts, rural and semi-urban consumers are also embracing consumer credit.
- Why it is important for retailers: Expanding credit access beyond metros opens up new segments. Products like two-wheelers, home appliances, and mobile phones are in high demand in these markets.
- Challenge: Retailers need localised partnerships with NBFCs and fintech players who understand local markets.
6. Flexible Repayment Models
Customers are looking for flexibility not only in purchase decisions but also in payment terms. Short EMIs, pay-as-you-go plans, and subscription-type financing are gaining traction.
- Why it matters to retailers: Variable repayment can differentiate a brand and attract more price-conscious consumers.
- Challenge: Having multiple models of repayment requires advanced fiscal management with lending partners.
7. Growing Fintech Partnerships
Retailers are increasingly collaborating with fintech startups to enable frictionless financing. From customised EMI offers to real-time credit checks, fintech is simplifying and making finance more intelligent.
- Why it matters to retailers: Fintech partnerships can drive sales while keeping operational complexity low.
- Problem: Retailers must choose reliable partners that appeal to their brand and customers’ aspirations.
Conclusion
Consumer lending is not a sales aid anymore; today, it’s at the centre of the Indian retail experience. From zero-cost EMIs and BNPL to fintech-driven innovation and UPI-funded credit, trends in financing are changing the way consumers shop and retailers operate.
For the retailers, the opportunity lies in adopting these models with caution. By offering choices, instilling trust, and enabling seamless experiences, they not only boost sales but also harvest long-term customer loyalty.
For today’s competitive retail environment, funding isn’t just about making products available; it’s about creating an ecosystem where shopping is easier, smarter, and more accessible to all consumers.