The Difference Between Bank EMI and Merchant EMI Explained

In today's competitive marketplace, giving customers flexible payment options isn't just a luxury — it's a necessity. One of the most effective tools for boosting conversions and driving higher-ticket sales is offering EMI (Equated Monthly Installment) plans. But not all EMIs are created equal.

If you're a merchant or D2C business evaluating how to offer EMI for your customers, you’ve likely encountered two options: Bank EMI and Merchant EMI. While both serve the same end goal — allowing customers to pay in installments — the way they work and the value they bring to businesses can be quite different.

In this blog post, we’ll break down the key differences between Bank EMI and Merchant EMI, highlight real-life use cases, and show why more businesses are choosing solutions like Secure EMI to offer seamless, bank-free, and credit card-free installment plans.

What is Bank EMI?

Bank EMI is the traditional model that involves banks or credit card issuers. In this setup, the customer pays using a credit card or a pre-approved loan. The bank then breaks the total amount into monthly installments, usually with added interest or processing fees.

How it works:

• The customer selects the EMI option at checkout.
• The transaction is processed through the customer’s credit card or loan-eligible debit card.
• The bank charges interest or a processing fee (unless a no-cost EMI offer is applied).
• Monthly deductions are made from the customer’s account or credit card.
• The bank settles the full amount with the merchant after deducting its own fee or MDR.

Limitations for merchants:

• Requires bank partnerships and approval.
• Limited to customers with credit cards or eligible loan profiles.
• Complex integrations and dependencies.
• Higher MDR (Merchant Discount Rate) and hidden costs.

What is Merchant EMI?

Merchant EMI, as enabled by platforms like Secure EMI, is a modern, bank-free installment solution. It allows merchants to create their own EMI plans and offer them directly to customers — without needing a bank or credit card in the process.

How it works with Secure EMI:

• The merchant sets up customized EMI plans via Secure EMI’s dashboard.
• Customers can authorize payments using UPI Autopay or NACH for automated deductions.
• Secure EMI manages the entire lifecycle — from KYC and customer authorization to recurring collections and settlements.
• All transactions are RBI-compliant, secure, and fully transparent.

Key Differences Between Bank EMI and Merchant EMI

Real-Life Use Cases: How Businesses Are Leveraging Merchant EMI

Let’s look at how different types of merchants are using Secure EMI to drive growth:

1. D2C Electronics Brand

A growing online brand selling mobile phones and smart gadgets enabled Merchant EMI through Secure EMI. Customers can now buy devices priced at ₹20,000–₹40,000 and pay in 6–9 month installments via UPI Autopay, even without a credit card. The result? A 35% increase in conversions during product launches.

2. Education & Skill Training Platform

An edtech platform offering upskilling courses priced at ₹15,000 and above uses Secure EMI to provide interest-free payment options. The entire EMI setup is completed online, with NACH mandates ensuring secure monthly collections. Student enrollments jumped by 40% post EMI rollout.

3. Fitness Equipment Store

A chain of fitness retailers implemented Merchant EMI in-store using QR-based UPI Autopay. Customers with limited credit access can now afford premium equipment without upfront payment stress. The business saw an 18% increase in average order value.

Unlike traditional Bank EMI, Merchant EMI through Secure EMI gives you full control — no banks, no credit cards, just instant, secure, and recurring payments through UPI Autopay or NACH.

Why Merchant EMI is the Future of Flexible Payments

• Wider Reach: Most Indian customers don’t own credit cards. Merchant EMI opens access to a larger audience via UPI and bank accounts.
• Instant Setup: With solutions like Secure EMI, merchants can go live with EMI plans in a day — no bank approvals needed.
• Control & Customization: Merchants decide the installment tenure, down payment, and discounts — not banks.
• Secure, Automated Collections: With built-in support for UPI Autopay and NACH, EMI collections are smooth and automated.
• Higher Sales & Customer Retention: Offering EMI options improves purchase affordability and builds long-term customer loyalty.

Final Thoughts

For today’s merchants, offering EMI is more than just a payment feature — it’s a strategic tool to unlock growth. While Bank EMIs have served well in the past, they come with limitations that no longer fit the fast, flexible, and inclusive nature of modern commerce.

With Secure EMI, you can empower your customers with instant, credit-free EMI options while keeping control in your hands. It’s easy to set up, fully secure, and optimized for recurring payments and collections — making it the ideal EMI solution for forward-thinking merchants.

Ready to Offer EMI Without Banks or Credit Cards?

Join hundreds of merchants using Secure EMI to drive conversions and increase customer affordability.

Set up your own EMI plans today — fast, secure, and credit-free.

👉 Started with Secure EMI