Now shop using your credit scores

eCommerce players like Paytm, Alibaba are trying their level best to make online shopping much easier for Indians. E-tailers are collaborating with payment companies to work out a model that will parse your online transaction history to provide credit scores and thus, enable you get loans to buy that costly iPhone 6 or the likes. And no, you won’t need to have a credit card to convert your purchases into EMIs.

The above-mentioned model is in line with what is already being followed in the US, Europe and China, says an Economic Times report. The financial daily further elucidates, this model would target people between age group of 22 and 28 years and new entrants into the banking system who have little by way of traditional credit footprint.

"EMIs will be restricted to high ticket price categories, for example on purchase of white goods, etc. In the instance when a customer does not have a previous credit history, we will evaluate their mobile phone bill payment for credit worthiness. We will only share the rating with banks and the user will be informed of the process," said Amit Lakhotia, vice president — payments at Alibaba-backed marketplace and payment solution, Paytm.

Alibaba had issued virtual credit cards to its customers last year in China, based on their transaction history.

The use of non-traditional data to evaluate credit worthiness opens up a new way for lending agencies which have been working with sellers on online marketplaces based on a similar credit rating mechanism.

Tejasvi Mohanram, founder and CEO of RupeePower, digital finance services marketplace, said: "We are utilising non-traditional data to match the right customer to the lending agency. We will analyse the credit history of an individual when they ask for a loan or EMI. It will be used by banks as a back-test where they will match traditional credit scores with the learning from non-traditional data."

Earlier, Snapdeal had picked up majority stake in the company in order to extend its customer-focused financial services initiative.

US and Europe were early in the adoption these services. However, after the crackdown on PayPal Credit's Bill Me Later service in the US for signing up customers without their knowledge, the solution providers in India are treading cautiously with respect to customer data and privacy.

"Our product will give the customer a decision in 15 seconds flat on whether they are eligible for credit or not," said Jitendra Gupta, founder of Citrus Payment Solutions, which works as the payment gateway for multiple ecommerce marketplaces.

He said: "We will assign credit scores to customers on our database, using our analytics engine. This will be mashed against the data provided by the marketplaces working with us, and with the traditional credit data our partner banks provide. We will only tell the bank whether the customer is eligible or ineligible for the loan. Disclosing credit score will be unethical."

(Image: Indiatimes)