No-Cost EMI is an Offer by which you pay your EMI provider only the product price, equally divided over your repayment timeline. You can create discounts on the offered products in such a way that they pay an EMI equal to the cost divided by the number of months of EMI.
Learn how you can create No-Cost EMIs on Razorpay Dashboard.
Let us consider the example of buying a mobile phone worth ₹15000 on No-Cost EMI on a 3-month EMI period. The bank charges 15% interest per annum. In this case, the retailer offers a discount of
Original Cost of Mobile Phone
No Cost EMI Discount Offered by Retailer
Net Cost of Phone
Total interest to be paid under EMI (In case of purchase on EMI)
EMI for 3 months
In the above example, the original price is discounted by ₹367.33. This cost is borne by the retailer. For a bank charging 15% interest per annum with an EMI period of 3 months, the discount is 2.45%. The discounted amount is ₹367.33 (₹15000 * 2.45%). Your customer will pay interest on a discounted amount of ₹14632.67. The interest paid by her would be ₹367.33.
EMI is generally calculated using the below formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
P = Principal
R = Interest rate per month
N = Number of installations of the EMI
For the case of No-Cost EMI, the EMI value is calculated as A/N, where A is the price of the product.
From the above example, EMI is ₹15000/3 = ₹5000
We will replace this value in the above equation to calculate the value of P.
5000 = [P x (0.15/12) x (1+(0.15/12))^3]/[(1+(0.15/12))^3-1]
P comes out to be ₹12333 and the discount borne by you is ₹367.33. This is equal to 2.45% of the original amount.
Tutorial – How to Create No-Cost EMI Offers
Let us understand Offer creation on Razorpay Dashboard with an illustration. Assume you are the manager of Bebo Mobiles and Accessories, an online smartphone store. To attract customers and increase sales, you want to provide discounts on online purchase. You would like to create a Diwali Offer with the following configurations:
Minimum Order Amount
Maximum Order Amount
Diwali Dhamaka – No Cost EMI
No Cost EMI Offers
Kotak Mahindra Bank
3,6 and 9 months
Let us get started with the No-Cost EMI offer creation process.
Follow these steps to create No-Cost EMI Offers:
- Log into Razorpay Dashboard.
- Navigate to Offers and click Create No Cost Emi.
- The Create an Offer wizard appears with the following four sections. Enter details in all these sections for the offer to be created:
You can review the Offer configurations at the end, in the Overview tab.
In the Description section, enter the following details. All the fields are mandatory.
- Offer Name – Enter the name of the offer. For example, Diwali Dhamaka.
- Display Text – Enter a meaningful description for the Offer. For example, No Cost EMI Offer. This will appear on the Checkout.
- Terms – Enter terms and conditions that are applicable for this Offer.
- Click Next.
In the Discount Type section, enter the details of the discount that should be applied for the Offer.
- Minimum Order amount – Enter the minimum bill amount for which the No-Cost EMI Offer can be applied. For example, customer must purchase an article of at least ₹4000 to avail No-Cost EMI. This is a mandatory field.
- Maximum Order amount – Enter the maximum bill amount for which the No-Cost EMI Offer can be applied. For example, customer can avail No-Cost EMI if they purchase a phone of maximum worth ₹300000.
- Click Next.
In the Applicable On tab, fill in the following details:
- Issuer – Select the bank that will be issuing the No-Cost EMI. For example,
Kotak Mahindra Bank.
- EMI Tenure – Select the tenures to be listed on Checkout. This also displays the discount that will be borne by you. For this example, we will select 3,6 and 9 months as the tenures supported.
- Click Next.
In the Offer Validity tab, set how long the offer should be valid and how you want to handle the payment failure situations:
- Starting On – Select the Starts Immediately checkbox for the offer to come into effect immediately.
- Expires On – Select the date and time at which the Offer should end. For example, 31 Oct 2020 at 11:59pm.
- On Payment Failure – Define how to handle payment failure.
- Do not allow payment to go through: The payment is failed.
- Allow customer to pay without availing offer: The payment is allowed even though the set validations are not met. However, the Offer is not applied to the bill amount. The customer will be charged the entire order amount.
We will allow payments to go through without offer being availed.
- Max Usage – Set the number of times the Offer should be applied across all transactions. For example, 100.
- Checkout Visibility – Select this checkbox for the created Offer to be displayed on all Standard Checkout renderences including Payment Links.
- Click Next.
Click the Overview tab to view the summary of the Offer that you just created.
Terms and Conditions – Select the checkbox after you have the read the disclaimer.
Click Create Offer.
By default, all the created Offers will be in enabled state.
Now that the No-Cost EMI Offer is created, you should integrate it in Checkout for customers to avail the EMI scheme.
Learn how to integrate Offers in Standard Checkout.