No ‘competition’ between Saudi Arabia, UAE: Top Mubadala official 

RIYADH: ‘Buy now pay later’ is gaining popularity in Saudi Arabia thanks to the country’s youthful population embracing new ideas around personal finance, according to a top executive at Dubai-based shopping platform tabby. 

Speaking to Arab News, the company’s general manager for the Kingdom, Abdulaziz Saja, said a traditional wariness around the use of credit cards in the region is allowing his firm’s business model to tap into a burgeoning market for delayed payments.

According to an analysis of the BNPL industry in Saudi Arabia published in October, the sector is expected to have grown by 69.4 percent on an annual basis to reach $321.4 million in 2021.

Saja believes it is the Kingdom’s demographic make-up, where two-thirds of the population are under 35, that is behind this growth.  

“This generation, which is tech-savvy and willing to embrace disruptive solutions, combined with a growing desire to take control of their financial freedom, makes BNPL an attractive option,” Saja said, adding that 70 percent of tabby’s Saudi customers are under 30 years old, and the majority are women.

tabby has over a million users in Saudi Arabia and the UAE and is set to grow further in the region.

In August, it raised $50 million in an equity round valuing the company at $300 million, and recently signed a partnership with online fashion platform Styli. 

Saja said his firm is “committed to Saudi Arabia” adding: “We are here for the long haul, the Kingdom is our home with over 80 percent of our total users.”

The BNPL industry seems to be succeeding where credit card companies have struggled, as their traditional products fail to be Shariah-compliant.

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“The region has a relatively low penetration of credit cards compared to more mature markets and for good reason. People are skeptical of traditional financial institutions taking advantage of them with interest and hidden fees. The market was ripe for a player to change the way we shop,” said Saja, who explained that tabby allows shoppers to split purchases into four monthly payments, free of charge, so long as they pay on time. 

“While credit cards rely on interest and late fees paid by consumers, at tabby we make 90 percent of our revenue from merchants. While we do charge late fees on defaulted payments, these are capped and nonrecurring,” Saja said.  

Abdulaziz Saja, tabby’s general manager for the Kingdom.

According to the Q2 2021 BNPL Survey, the medium-to-long-term growth story of the industry in Saudi Arabia remains strong.

BNPL payment adoption is expected to grow steadily over the next seven years, recording a compound annual growth rate of 27.9 percent between now and 2028. 

The BNPL Gross Merchandise Value in the country is forecast to increase from $189.7 million in 2020 to $1.8 billion by 2028.

There are concerns the BNPL model promotes impulse buying and pushes consumers into financial over-commitment. Saja rejects this notion and said: “Most BNPL platforms, tabby included, firmly believe in responsible spending and the overall financial well-being of their users. 

“We want people to have the ability to buy the things they want without it becoming a burden. We are steadfast in promoting a business model that is built on trust, not interest. 

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“BNPLs are merchant funded and so have a much lower appetite lending to risky customers that don’t have the means to pay. The same simply cannot be said about credit cards. 

“If you’re late on a credit card payment, you can still use the card letting interest compound month over month which is what it’s designed to do. With tabby, we stop the usage of the service, and our late fees are capped to help you stay in control of your finances.”


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