How Does Zero Cost EMI work?

What is the catch here? How do Companies involved make money here?

A Thread🧵👇

Please "RT" if you like the thread.

1/ You are looking for a mobile phone worth Rs.10,000 on Amazon and as you move ahead to place the order, you are offered an option to pay that amount spread across 6 months. 6 EMIs of Rs.1667. No interest charges or processing fees.

2/ The next thought you have is - ‘obviously there is some catch here’. Why would someone give me an option to pay over 6 months? That too without any fees/charges!?

The catch is - it is more to do with marketing and sales than finance.

3/ There are 3 entities involved in this transaction. The platform (Amazon), Mobile Brand (Samsung), and the finance company (Bajaj Finance).

4/ Imagine you are a student who just got an internship with a stipend of Rs.5000. Shelling out Rs.10000 may not be possible for you. But if you have to pay Rs.1667 a month for 6 months, you feel like you have got a deal! Samsung gets to sell more. Amazon gets more commission.