Flexibility and convenience in payment matter a lot when it comes to the world of business finance. Whether it is purchasing equipment, maintaining inventory, or simply smoothing cash flow, several businesses consider EMIs (Equated Monthly Installments) as a fabulous way to extend the payments without feeling strained.
However, there is a catch here: do you want to go with EMI via credit cards or consider EMI on UPI? It is a heated argument in the current world, particularly due to the increased usage of digital payments. And so, it is time to learn both possibilities and see which would better serve the business.
What’s the Difference Between EMI on Credit Cards and EMI on UPI?
EMI on Credit Cards is a situation where you borrow money on a credit card and repay it through instalments, which may have additional interest and charges. Conversely, EMI on UPI involves direct bank-to-bank transfer at a lower cost, immediate payments, and less effect on your credit score, making it a more convenient and less expensive alternative.
Still having confusion?
The following table will facilitate your understanding.
| Feature | EMI on Credit Cards | EMI on UPI |
| Payment Mode | Credit is borrowed from the card issuer | It involves a direct payment transfer from the UPI platform. |
| Interest Rates | The rate varies between 12-22% | The rates are on the lower side and often zero in some cases. |
| Processing Fees | The banks generally levy processing fees. | There are no or minimal processing fees. |
| Setup Requirement | It requires credit card approval | It requires a linked bank account and UPI registration. |
| Transaction Speed | It is instant, but mainly depends on the billing cycle. | It is real-time and instant |
| Impact on Credit Score | It will affect your credit utilization | There is no direct impact on the credit score. |
| Offers/Reward Points | The user will receive reward points and cashback. | Even though there are no rewards, but is very cost-effective. |
| Flexibility in Tenure | Usually 3 months to 2 years | Flexible tenure based on the UPI provider. |
| Acceptance | It is accepted on a global scale. | It is mainly domestic but is gaining popularity on a global scale. |
Why Businesses Consider EMI on Credit Cards?
EMIs through credit cards have been the customary path. They have the merits of flexibility in terms of tenure and are accepted extensively at most buying points. In addition, most credit cards promise reward points, cashbacks, and promotional zero-interest EMI options in association with the merchants.
In business terms, this implies that one can decrease the instant cash charge with a little incentive or discount. However, there are some problems associated with EMI on a credit card.
The EMIs on a credit card may have hefty interest rates, and when EMIs are blocked, the processing fee or pre-closure fee may incur extra expenses. In addition, increased utilization of credit may adversely impact your business’s credit score, particularly when EMIs are not handled with care.
This aspect needs to be managed in terms of credit to prevent the EMI problem in the future.
The Rise of EMI on UPI in Business Payments
EMIs on UPI are quickly emerging as a game-changer in this segment, where businesses are in need of pocket-friendly methods of payment, with a convenient execution process.
UPI has already gained popularity because of free and immediate payment settlements, and by offering the option of EMI payment on UPI now, companies would be able to divide payments into small, affordable monthly payments without needing credit card facilities.
Why is EMI on UPI Gaining Popularity?
The following reasons will help you learn about what makes EMI on UPI popular.
● Lower Costs
Its fees are usually none or minimal to process.
● Faster Set Up
It does not require credit card authorizations or credit ratings; linked bank accounts are adequate.
● No Impact on Credit Score
This is a massive advantage to businesses that want to maintain a clean credit profile.
● Instant Payments
Real-time confirmation of transactions allows easy cash flow management.
Which One Should Your Business Choose?
It all depends on your business priorities.
| Consideration | EMI on Credit Cards | EMI on UPI |
| Cost Sensitivity | High to medium costs due to interest/fees. | Interest-free or low-cost options available |
| Need for Incentives and Rewards | Yes. Valuable for reward-driven businesses | No or limited reward offerings |
| Credit Profile Impact | Possible negative impact on credit score | No impact. Ideal for a clean credit history |
| Ease of Use | Requires billing cycles and credit card approval | Set up through UPI and instant transactions |
| Purchase Type | Suitable for international or high-value buys | Best for frequent flows and domestic purchasing |
Final Thoughts
Businesses that are in consideration mode should consider this:
- EMI on UPI might be what you are looking to use when cost-effectiveness and time-saving are priorities, and you do not want the hassle of credit scores and processing fees.
- EMI on credit cards does retain its charm, though, provided your company value involves rewarding and easy credit, and you can repay it.
Jump into the future using smarter EMI options. When your business is seeking a wide range of hassle-free, digital-first, and cost-efficient EMI tools, consider EMI on UPI via platforms such as Snapmints’ business, which would take your payment strategy to the next step.